February 25, 2021

Refinance Car Loan

Q: I have a car loan with a high interest rate and high monthly payments. I want to refinance the loan, so the interest rate is lower. How can I do this?

A: An auto refinance loan can help you lower your interest rate and monthly payments. In the refinancing process, your old loan is paid off and a new loan is created. You end up with new fixed monthly payments, a new fixed interest rate, and possibly a new lender.

Follow this process:

1.Apply to refinance your car loan. Many banks and credit unions offer the option to refinance a loan. You’ll have to submit an application.
✓The application will ask for personal and financial information, including employment information, loan data, other debt information, monthly income, and details on your car.
✓You’ll also need to know the remaining balance of your current car loan.
2.Consider co-applicants. You may need a co-applicant to get approved for a loan.
✓The lender may require a co-applicant if you have a low credit score or issues in your credit history.
✓You may also need a co-applicant if your income is too low to qualify for a loan.
✓The co-applicant will have to review the documents and sign them. By signing, your co-applicant is agreeing to take responsibility for the loan and make the payments if, for some reason, you can’t make the payments yourself. Also, this loan can affect their credit score as well, even if you’re the one making the payments.
3.Discuss your options. You may qualify for different types of loans with various options. It’s important to consider all of them before you pick one.
4.Wait for approval. If you’re approved by the lender, then the lender will notify you.
5.Sign new loan documents. You’ll have to sign new documents from the lender for this new loan and make the payments according to these new terms.
Auto loans can be refinanced, but it takes time and effort. This time and effort will be well worth it if you can qualify for a lower interest rate or smaller payments. 

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