How to Refinance a Car Loan

If you’ve been paying off your car loan with on-time monthly payments and your credit score has increased with time, you may be a great candidate for refinancing. How do you refinance a car loan? The process is no more complicated than when you first applied for your current car loan. In the guide below, the knowledgeable finance team from BMW of Southpoint explains how to refinance a car loan with actionable steps for success! 

How Do You Refinance a Car Loan?

Raleigh drivers who choose to refinance their car loan are seeking to lower their interest rate, thus decreasing the total amount paid by the end of their loan. The best way to refinance an auto loan might vary between drivers and their unique circumstances, but a solid place to get started is to confirm your current interest rate and monthly payment. Once you gather that information, you can move on with the steps below:

• Assess Your Credit Score: If you’ve been making every auto loan payment in full and on time, while also keeping up with any other financial obligations, your credit score has likely increased from the time you applied for your loan.
• Start the Application Process: Apply with a handful of automotive refinance companies so you can compare their rates. As always, you should limit your applications to a 14 day period so as not to harm your credit score.
• Compare Offers: Take the time to assess each offer so you can confidently select the most favorable one. You may find it helpful to utilize our monthly payment calculator along the way.
• Choose a Loan Term: Remember, a short-term loan will have higher monthly payments but will be paid off sooner, meaning less interest paid overall. A long-term loan has smaller monthly payments but will take longer to pay off, so you’ll pay a little more in total interest. 

If you’d like additional information or one-on-one help, our finance team will be happy to meet with you to determine the best way to refinance a car loan. 

What to Know When Refinancing Your Car

As with all financial decisions, there are a few factors to consider before you refinance your car loan. Here’s what to know when refinancing your car in Cary:

• Early Payoff Fees: Some auto loan contracts have an early loan payoff fee built into them. Check your original contract to see if this applies to you; if the fee is hefty, it may be better to continue with your current loan.
• Upside Down Finances: If you owe more than your vehicle is worth, refinancing will probably be difficult. Instead, you might consider trading in your financed car so you can consolidate what you owe into a new agreement on a more affordable vehicle.
• State of Depreciation: If your vehicle has already undergone a lot of depreciation, you might find it difficult to get lenders to consider you for refinancing.

Learn About Your Options at BMW of Southpoint

If you’re still unsure of how to refinance a car loan, our team can help. Contact us for an appointment or stop by on your way home from Chapel Hill to speak with our friendly finance professionals. We’re conveniently located in Durham and are ready to provide car-buying tips you can trust!