Should You Refinance Your Auto Loan?

Juliet D'cruz

Updated on:

If you have a car loan, you’re probably wondering if it would be wise for you to refinance it. The following is some information about refinancing auto loans and how you can tell if it’s right for you.

How Much Money Can You Really Save by Refinancing?

Refinancing is an excellent idea if you want to save money. The whole idea of refinancing is that you might be able to grab onto a lower interest rate if you do it. The interest rate you get will depend on your credit score and how much it improved since you had your current auto loan open. The higher your score is, the lower your interest rate options will be.

It might be a wise idea to compare auto loan refinance rates with Lantern by SoFi. You’ll be able to see your options and apply for the best rate possible. In some cases, you might be able to save thousands of dollars on your auto loan because of the decrease in interest.

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When Should You Consider Refinancing?

Several circumstances might prompt you to request to refinance your auto loan. One circumstance is if you signed up for a highly expensive initial loan because you needed a vehicle right away. Sometimes, lenders issue auto loans with rates of up to 30 percent or more. Your credit score usually increases within six months of paying for a new auto loan. That would be a good reason to try to refinance your loan. You may also want to refinance your auto loan if you want to decrease the length of your agreement.

Perhaps you’d like to pay off your loan in a shorter period so that you can buy a house. Your car might be aging and losing value as well. That’s another good reason to refinance. You may have another reason for wanting to refinance your vehicle loan. 

All reasons are legitimate, and you have an excellent chance at getting approved. You should first try to improve your credit score so that you walk in with the best situation. You can order a copy of your report and then dispute any accounts that don’t seem legitimate.

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How Difficult Is It to Refinance?

Refinancing a car loan is not difficult at all. According to Lantern Credit, a wealth of options is available. You just need to reach out to the provider and ask to perform a comparison of your options. They may have an online application you can fill out if you want to see if you qualify. They might also offer a prequalification form. 

Sometimes, that’s a better option because it doesn’t affect your credit score. You can find out if you’re likely to obtain approval before you put a hard pull on your report. Approval doesn’t usually take long after you complete an application.

You can clearly see the benefits of performing a refinance on your auto loan. You now have the tools you need to compare rates and reach out to a reputable provider who can help you.