Do you currently have an auto loan and are thinking about refinancing? If so, you likely have a few questions about doing it.
When Can You Refinance A Vehicle?
People tend to have confusion about when they can refinance a car, with them not knowing when they are allowed to do it. The truth is that it all depends on your lender. Some have restrictions that require you to hold the loan for a specific amount of time, while others have no waiting period and you can refinance the loan whenever you want. Make sure you fully understand the terms of your loan so you know when you can refinance.
What Do You Need To Pay Attention To When Refinancing?
The two things to keep in mind when refinancing are the rate of the new loan that you are getting and your credit score. You'll definitely want to refinance with a lower interest rate because the goal is typically to save money. However, you also should pay attention to your credit score. Having a credit score that is much better than when you applied for the loan can result in a better interest rate.
How Complicated Is Auto Refinancing?
Refinancing an auto loan is very different than refinancing a home. There are often no closing costs associated with refinancing. That is why it is worth looking into refinancing if interest rates have gone down, even if it was a few months after getting your original loan. You may be surprised at how easy it is to refinance a vehicle.
Will Your Credit Be Affected By Refinancing?
Be aware that there is going to be a hard credit pull when you refinance your vehicle. However, this will only negatively affect your credit for a short amount of time. If you're going to save money by refinancing, it will be worth having a hard credit pull performed on your credit report, because it is going to benefit you over time due to the money that you save.
Can You Change The Loan Terms When Refinancing?
Auto loans are typically for fixed terms based on a set amount of years. However, you can use refinancing as a way to shorten the term and pay less in interest. For example, you may have gotten a raise at work and are not able to afford a larger car payment. You can refinance the loan for a shorter term, which will increase your monthly payment but lower the total interest paid.
For more information on an auto loan refinance, contact a professional near you.