Question: I’m not pleased with my current interest rate. I want to change my lender and get a better rate to save money. Is changing my car loan to another bank even an option?
Answer: Just like you can refinance your home loan, you can also refinance your car loan. Refinancing is also how you can change your loan to another bank. This can be a great option to save money and move away from loan terms that may no longer work for you. Conversely, it may not be the best option either. But if you find yourself looking to change loan providers, here is how you can do it.
- Before doing anything, you need to do your research. Look at your different options (you may even have viable refinance options with your current lender) and figure out which one is the best for you moving forward.
- The next step is to collect all your documents. As you may remember from when you signed your original loan, you’ll need to bring several things with you. This may include: Personal information:
- Personal information: This includes your social security number, monthly bill information, mortgage information.
- Proof of auto insurance.
- Information about your current loan, including balance, terms and lender information.
- Information about the vehicle such as make, model and current mileage.
- You have done your homework, now it’s time to see if you can get a refinanced loan. This is where having all your documents at the ready comes in handy. Understand that applying for this loan also involves a credit check. This would count as a “hard inquiry” and could temporarily lower your credit score. If approved, you’ll sign documents and get the terms of your new loan.
- This final step is to pay off your old loan and start with your new loan. Much of this process happens without you, as your lender will make sure money gets where it needs to go. However, it’s still important to ensure these steps are taken care of so no loose ends are tying you up.
Getting prequalified
One thing you may have yet to consider, but can be an essential part of the process, is getting prequalified by a lender. While it’s not a guaranteed approval when you apply for the loan, it’s a good way to see if your current information and status make the lender viable. In short, you spend a little bit of time that could save a lot of wasted time if you and the lender don’t match. You can do this with various lenders, and on the plus side, these checks are considered a “soft inquiry,” so it won’t impact your credit score.
Chris Burkhardt is a writer and editor with over a decade of experience across various storytelling mediums. With Jerry, Chris hopes to help anyone with a question about their vehicle easily find the answers they are looking for. Whether you need to know how much insurance costs for a classic car, how to replace a broken light or tell if you need an oil change, Chris wants to help you find solutions the best he can. Prior to joining Jerry, Chris was a digital content producer and writer for NBC and a freelance editor for NerdWallet. A graduate of the University of Oregon’s School of Journalism and Communication, if Chris is not working on content, he’s sure to be found cheering on his Ducks!
Giselle Gomez is an editor with over a decade of experience editing content across personal finance, education, travel, and sports. In editing for Jerry, Giselle’s focus is on making sure content is consumer and SEO-friendly and helping readers understand all things car ownership. In prior roles, she worked as a content strategist, syndication editor, and writer. Her work is featured in AP, NerdWallet.com, BestColleges.com, and more. Giselle holds a master’s degree from Arizona State University.
