Refinancing an auto loan affords a lot of benefits; it can help reduce your monthly payments, earn you a lower interest, and/or extend your loan term. And when you’re budgeting your money, any little bit helps. If you’re struggling to make your car payments on time, refinancing can be a smart option to consider and could potentially save you hassle down the road. Below, you’ll find more information on how to refinance a car loan!
How to Refinance a Car Loan
Auto loan refinancing is quicker than you might think. Follow the steps below to refinance your auto loan and get terms and rates you’re happy with:
- Review Your Credit Score: If your credit score has improved significantly since you took out your original loan, you may be able to get lower interest rates when you refinance.
- Review Your Payment History: Do you have any outstanding credit card bills? Paying them off before you attempt to refinance your loan will improve your chances of getting newer and better terms.
- Gather Documentation: Lenders require documentation to complete your application, such as a state I.D. or driver’s license, proof of employment, documents from your current loan, paycheck stubs, and tax return information. Once you have those documents, you’re ready to move forward.
- Submit Your Application: Complete the application and answer each question honestly and fully. If you’re unclear on a specific question, ask for clarification!
- Review Your Offers: Once you receive your new offers, review them carefully. Before you apply for refinancing, it’s always best to have a goal in mind. Are you aiming for a lower interest rate with a shorter loan term? Or, would you prefer lower monthly payments and a longer repayment period? Decide which offer works best for you.
- Decide on a Loan: Is the loan offer you’ve chosen an improvement over your current loan terms? If so, you’re in a good position to finalize the new terms.
- Complete the Process: Once you’ve re-evaluated the new offer and are satisfied it’s the best option for you, sign the paperwork to complete the loan.
Keep in mind: It can take a few days before the process is complete, especially if you take your time evaluating offers. It’s also important to note that you should restrict your loan applications to a small time window to help minimize the impact on your credit score. Refinancing can temporarily hurt your credit, but with regular payments made on time and in full, it should improve fairly quickly.
Get More Financial Advice from Public Service Credit Union!
Do you have more questions about how to refinance a car in Detroit? Public Service Credit Union can assist if you’re interested in refinancing your car loan by taking out a loan with a credit union. Credit union loans often offer lower interest rates and more agreeable loan terms than banks and other institutions. Contact us to learn more about your options or to find a credit union in Michigan.