Auto refinancing saves money by lowering your interest rate

Auto Refinancing

Auto refinancing with RateGenius allows you to save money by lowering your interest rate on your car, truck or SUV.

Auto refinancing with RateGenius allows you to save money by lowering your interest rate on your car, truck or SUV. Auto refinancing can also help you secure a lower Annual Percentage Rate (APR). A lower APR can reduce the total amount the loan, saving you money on interest over time.

With interest rates as low as 4.67% and an average savings of $101 per month*, you should consider refinancing your current auto loan for a number of reasons:

• if auto loan rates were high when you purchased your vehicle, but refinance rates have since dropped
• your credit score has improved
• you didn’t receive an ideal interest rate when you purchased your vehicle
• you have had financial setbacks

Auto refinance allows you to lessen the burden of your monthly car payment. Additionally, if you’re wanting to free up some extra funds, refinancing can allow you to defer payments, giving you some extra money at a time when you need it the most.

If you are not sure how refinancing your car loan amount will help you save money every month, read through the loan calculator example below. By refinancing their vehicle loan, this individual dropped their interest rate from 10 percent to 5 percent. In doing so, they were able to save more than $2,800 over the life of their loan and dropped their monthly payment by almost $50.

Why Refinance?

Refinancing your loan balance can be a strategic financial decision for a whole host of reasons.

• Lower Interest Rates: If market interest rates have dropped since you took out your original loan, considering an auto refinance loan can help you secure a lower rate, reducing your monthly payments and total interest paid over the life of the loan.
• Improved Credit Score: If your credit score and/or overall credit history has improved, you may qualify for better loan terms and a lower APR, which can lead to significant savings.
• Reduced Monthly Payments: Refinancing can give you a longer term for your loan payment, which can lower your monthly payments, making it easier to manage your budget.
• Shorten Loan Term: You can also refinance to a shorter loan term, which can increase monthly payments but reduce the total interest paid and allow you to pay off your car sooner.
• Cash Flow Management: If you’re facing financial challenges, refinancing for a lower monthly payment can provide immediate relief by freeing up cash for other expenses.
• Change Lenders: Refinancing allows you to switch lenders, which can be beneficial if you’re unhappy with your current lender’s customer service or payment terms.
• Remove or Add Co-Signer: If your financial situation has changed, refinancing can help you remove a co-signer (also known as a co-borrower) from the loan or add one to improve loan terms.
• Avoid Balloon Payments: If your original loan includes a balloon payment (a large lump sum due at the end of the loan term), refinancing can spread out this amount over a new loan term, making repayment more manageable.
• Equity Cash-Out: If your car is worth significantly more than what you owe, some lenders offer cash-out refinancing, allowing you to borrow against the car’s equity.
• Improved Loan Features: Refinancing may provide better loan features, such as more flexible payment options, no prepayment penalties, or lower fees, enhancing the overall loan experience.
• Break Up With Big Banks:  Credit Unions, which have better rates, personalized service, and more satisfied members than larger financial institutions, comprise most of our lender network.

While the pros of refinancing a new auto loan almost undoubtedly outweigh the cons, it is worth noting that the majority of borrowers will pay an origination fee of up to $450. An origination fee is a charge assessed by the lender for processing the new loan application fees and handling the necessary paperwork.

What is Required for Auto Loan Refinancing?

Anyone who is 18 years or older and a U.S. citizen with an existing auto loan can apply to refinance anytime after they have purchased their vehicle.

Typically, refinancing an auto loan typically requires a few key elements. First, lenders will assess your credit score and financial history to determine eligibility and the terms of the new loan; a good credit score can significantly improve your chances of securing a favorable rate. You’ll also need to provide details about your vehicle, including its make, model year, and mileage, as well as information about your current loan, such as the payoff amount and interest rate. Proof of income, such as recent pay stubs or tax returns, is necessary to demonstrate your ability to repay the loan. Additionally, you must have adequate insurance coverage on the vehicle, as most lenders require comprehensive and collision insurance.

However, when refinancing via RateGenius, all you need is your personal, vehicle, and current loan information to fill out our online loan application.

RateGenius makes refinancing easy by comparing more than 150 lenders nationwide to find the best match for you, the borrower. We handle all the work from assessing eligibility and seeing if you prequalify, to finding the best auto interest rates, to comparing disclosures and rate discounts, to funding your new loan.

*The average savings is based on all loans funded January 1, 2022 – December 31, 2022.

Calculate your savings with our auto refinance calculator