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How to Refinance a Car Loan

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Looking to lower your monthly auto payments or save on interest costs? You may be thinking about refinancing your car loan. Here at the Holiday Automotive finance center, we have the know-how needed to help you weigh whether or not refinancing is right for you. We can also answer your questions surrounding what to know when refinancing your car in Fond du Lac. Ready to learn how to refinance a car loan? Keep it with us below, or contact us for additional information.

What’s the Best Way to Refinance an Auto Loan?

If the main goal of refinancing your car loan is to lower the interest rate you are being charged each month, and thus, lower your monthly payments, then the first best step to take when looking into refinancing your car loan is to figure out what you already pay.

To do that, take a look at your current lease or loan agreement, or contact your lender directly to confirm both your current interest rate and your current monthly payments. Once you have that on hand, here’s what you’re going to want to do:

  • Check Your Credit Score: Has your credit score improved since you took on your car loan initially? If so, there’s a good chance you’ll qualify for a better rate and lower payments when refinancing. If it’s lower, you’ll probably want to rethink financing, and instead consider trading in your vehicle to capitalize on its equity while choosing a vehicle that will give you lower monthly payments.
  • Start Applying: Apply to several automotive refinance companies to be sure that you you get the best rate. Just remember, you’ll want all applications to be sent in within a 14-day time-window of each other to lessen the associated impact on your credit score.
  • Evaluate Offers: Take a look at all refinancing offers that have been extended to you with a fine-tooth comb. This will help you make the best long-term decision.
  • Decide on Your Loan Term: Figure out if a longer or shorter loan term better fits your refinancing needs. Remember, a shorter term loan will require larger monthly payments, but you will pay less interest. The inverse is true for a longer loan term.

The specific “best way to refinance an auto loan” for you will of course depend on your unique circumstances, so be sure to think critically about what your overarching needs are as they pertain to your car payments, and then figure which offers you get, if any, work best with those needs in mind. And remember, our finance experts will always be available to talk you through all your options to come to the most sensible decision!

What to Know When Refinancing Your Car

Wondering what else there is to know when considering refinancing your car? From fees to underwater financing, here are some additional things to keep in mind:

  • Fees: Be sure to check your original car loan contract to ensure that there aren’t any fees associated with paying it off early. If there are, refinancing may not be a cost-effective option for you. 
  • Underwater Finances: Does the value of what you owe on your loan exceed your vehicle’s current book value? If so, it can be harder to get approved for refinancing. What’s more, refinancing may not be a sound financial decision, depending on your situation.
  • Older Vehicles: Many lenders won’t bother refinancing a very old car that has already experienced a lot of depreciation. 

Learn All About Your Financing Options at Holiday Automotive!

Ready to figure out if refinancing is right for you now that you know the best ways to refinance auto loans? Give our finance experts a call at (866) 807-8084 now for additional assistance, or just contact us online. Here at Holiday Automotive, we strive to provide you with the auto finance tips that you deserve to make car budgeting simple!


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