Reasons Why You Should Consider Refinancing Your Car

Do you wish to save money on your vehicle loan? Refinance your car could be an option to lower your monthly payment or reduce the amount of interest that you pay. You can use the money to save or pay down credit cards. Find out when it’s the right moment to refinance and how.

How Do You Refinance A Car?

Refinance means replacing your auto loan with a brand-new one. The new loan repays your original loan. You then begin making monthly repayments on the loan. Refinance can be done quickly and the application process is not complicated. But before you jump, there are a few things to be aware of.

Chase doesn’t offer to refinance. Instead, we’ll go over the steps below to help you decide if Chase is the right fit for you.

Refinance Car Loan in Simple Steps

Can you refinance car loan? It is important to prepare before asking this question. The process may differ depending on the lender, but you can prepare yourself for the next steps by knowing the basics.

1. Determine If Refinancing Would Make Sense for Your Situation

Refinance an auto loan may reduce your monthly repayments or lower the interest. But, this may not be possible if you have any of the following conditions:

You Are Behind On Your Payments: Late payments on an existing loan, or any other credit problems, could impact your eligibility for a loan of better terms.

Prepayment Penalty: This is the fee you have to pay in advance for your loan. It could result in reductions in refinancing savings.

You owe More Than Your Car’s Worth: Obtaining favorable loan terms can be challenging if your loan balance exceeds your vehicle’s actual value.

If you have an old vehicle, some lenders won’t lend to them. It is better to replace your car.

2. Credit Checks

Lenders heavily consider credit scores and your credit history when approving loans or setting interest rates. Higher credit scores typically translate to lower interest rates. It is possible that your credit rating has improved over time.

3. Get the Documents You Need

Making sure you have all the documents at hand can make the application process easier. You’ll most likely need the exact same items to get a loan.

  • Your driver’s license
  • Documentation proving insurance
  • Pay stubs or proof of income
  • Your Social Security number

Also, you need a duplicate of your original loan agreement. If you don’t have a copy of your original loan contract, contact the lender for a copy. A new lender could request information about your existing loan.

  • Your balance
  • Your current monthly payments
  • The remaining time for your loan
  • The interest rate at which you are charged
  • Vehicle information such as vehicle identification number, (VIN)

4. Request Financing or Apply To Be Prequalified

If you find the right deal and feel confident about your eligibility, you might be able to immediately start the application. It could also lead to a difficult inquiry about your credit history. Being prequalified may give you a better idea, without adding to your credit file.