How to Refinance a Car Loan

If you’ve been paying your car payments in full for a year or two, it might be worth your while to explore auto refinancing options. Learning how to refinance a car loan can pay off at lower interest rates and lower monthly payments, which can save you a ton of money for the duration of your contract. Find out the best way to refinance your auto loan with Chrysler Dodge Jeep RAM of Princeton, and take the next steps at our finance department in Princeton!

How Do You Refinance a Car Loan?

The best way to refinance an auto loan is to lower your interest rate, so think of that as your goal as you navigate the process. However, the path to better loan terms will depend on your unique circumstances. One driver in New Brunswick might want a shorter loan term, while a driver in Trenton might not. There’s no right and wrong way to refinance, so here are a few general ideas of what to know when refinancing your car:

• Check Your Credit Score: Has your credit score changed since you started making payments? There’s a good chance it has improved over the duration of the loan, so take a look.
• Start Applying: You’ll want to apply broadly to several automotive refinance companies to compare deals and choose the best one, but work fast. Apply within a 14-day period to avoid marks on your credit score.
• Evaluate Offers: While you need to work quickly during the application process, take as much time as you need when evaluating the offers. Be sure that you really understand the terms and conditions, and use our monthly payment calculator to crunch numbers.
• Decide Loan Term: This is based on your preferences. Shorter loan terms mean less interest but higher monthly payments. Longer loan terms mean more interest but lower monthly payments.

What to Know When Refinancing Your Car

We’ve covered “how do you refinance a car loan” but should you refinance in the first place? Here are some things to keep in mind when weighing your options:

• Fees: Will you be penalized for paying off your car loan early? Check your paperwork to be sure that you won’t run into any fees, or refinancing might not be as cost-effective.
• Underwater Finances: Do you owe much more than your vehicle’s currently worth? This is called being “upside down” or “underwater” on your loan, and it makes refinancing more difficult.
• Older Vehicles: Is your vehicle older? Many lenders won’t refinance an older car that has already been through the bulk of its depreciation. 

Learn About Your Financing Options at Chrysler Dodge Jeep RAM of Princeton

Want to know the best way to refinance your auto loan? The experts at Chrysler Dodge Jeep RAM of Princeton would be happy to help you learn how to refinance a car loan, so don’t hesitate to reach out to us with any questions. You can visit us in Princeton or contact us online at any time!