Most people who buy a car have to finance it with a car loan, either through the dealership or through a third-party lender. Financing simply means paying off the car loan in monthly installments with interest that accrues over time.
The alternative is to simply pay for the car outright. This will save you money, but it isn’t very practical for most people. After all, the average price of a new car in 2019 was
over $36,000, and the price is only going up.
Most people don't have that kind of money lying around, and even if they do, it might not be practical for them to spend that much in one lump sum.
There are lots of different routes to go when financing for an auto loan. In general, the less you pay per month, the higher your interest rate will be. And if you pay more each month, you'll have a lower interest rate. You'll save money in the long run by paying more each month, but you'll need to be confident that you can pay off the loan in
a shorter period of time.
Of course, different lenders also offer different deals (and take into account factors like your income and credit score differently), so no two finance packages are quite the same. As such, you may find yourself wanting to refinance your vehicle at some point.
Refinancing a car loan can be a huge relief on your budget, and can help you save hundreds of dollars. Finding the right lender can be a huge pain that might end up costing you time and money.
Jerryremoves the hassle by giving you one app that instantly connects you with top companies to meet your particular financial needs. Make sure you’re not overpaying for your car loan by comparing quotes from multiple lenders to find the best option for you.
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What is refinancing a car and how does it work?
Refinancing a car is simply rebooting your loan deal with different terms, and usually with a different lender. In general, you and a new financier agree on terms that are more beneficial to you. The new financier then pays off your old financier in full, and you begin making payments to your new financier based on your new agreement.
Contact your financier
Contact the financier handling your current loan and let them know that you are looking for better terms. It’s in their interest to keep you as a client, so they may be willing to offer you slightly lower payments or lower interest. If your credit has increased since your financing began, then you have a good shot at having an
improved finance package.
Some people simply refinance to adjust their plan rather than improve it. If you got a large promotion at work, you may want to pay more monthly in exchange for lowering your interest rates. Most financiers will gladly adjust your payment to interest ratio to better fit your needs.
Determine your financing goals and contact lenders
You won’t always find your dream finance package, but it’s important to know what you’re looking for. Before moving forward, look at your budget and determine how much you are willing to pay on a monthly basis. That will make the process of searching for the right refinance plan easier.
If you can come to lenders with specific ideas in mind, you can get through the process a lot quicker. It'll make your financial goals clear to the lenders as well.
There are lots of different lenders, from those who specialize in auto financing to small credit unions and big banks. Contact numerous lenders to make sure you get a variety of options.
Most potential lenders will offer you a quote online after you input your current finance plan, income, and credit report.
If you don't want to search for lenders yourself, give
No matter your credit score, Jerry makes refinancing your car easy by comparing quotes from multiple lenders to find a rate that works best for you. We'll even alert you when we've found a plan that could work for you.
Choose a plan
Once you’ve found the right refinance plan for you, you’ll have to apply for it. If you’re accepted, you can contact your initial lender and let them know that you plan to refinance. You’ll pay back your original lender (either with a check from your new financier, or the financier will pay them directly), and then you’ll begin your refinance plan.
After refinancing, keep an eye on
your credit score. Taking out a new car loan can cause your credit score to go down, while refinancing with a new lender usually impacts your credit score less because it's replacing an already existing debt from the original loan.
Refinancing is a great way to find a payment plan that better suits your needs and your budget. If you feel like you’re paying too much for your car, either in monthly payments or in interest, then refinancing may be perfect for you.
Refinance with Jerry
Jerryis your car ownership assistant. We believe that car ownership should be affordable and painless.
If you're looking to refinance your car loan, start your search with the Jerry app. You can compare quotes from multiple lenders without worrying about your credit history. Avoid the hassle of researching and sending documents to potential lenders. Jerry’s app instantly connects you with top companies and takes into account your specific financial needs to find a loan that best meets those needs.