How do I refinance my car loan?

I purchased a car with an 84-month loan three years ago. Since then, interest rates have dropped and my credit score has improved quite a bit. A friend told me I should refinance my loan to save cash, but I’m not sure where to start. What’s the best way to refinance my car loan?

Answer
Refinancing your car loan is a great way to save money, so finding out how to do it is a savvy financial play on your part! To refinance your car loan, you follow many of the same steps as getting your original car loan, so the process should feel familiar.
Before you begin, review your original loan contract to verify it doesn’t have any prepayment penalties. If a loan contract has a prepayment penalty, it may offset the savings of refinancing. Check this first to ensure that refinancing is worth the hassle in terms of time and money.
If your contract has no prepayment penalty, the next step is to review your credit report. While the lender will pull your credit report, knowing what’s on it and if you need to pay any delinquencies or other debt down can only improve your chances of getting accepted for a refinance.
Next, shop around for the best rates at:
  • Banks
  • Credit unions
  • Dealerships
  • Third-party lenders, such as online lenders
The more effort you put into this step, the greater your chances of finding the best rate possible.
Finally, you can apply for a loan with your lender of choice. Once you’re approved, review the contract and evaluate the loan terms to see if it’s to your liking. Sign on the dotted line, and you’ve refinanced!
Since you’re reviewing your car loan, now is the ideal time to do the same with your car insurance. The Jerry app makes it quick and easy to find the best deal on coverage. As a licensed insurance broker, Jerry allows you to compare quotes from over 50 top-rated insurance providers. If you find a better rate, Jerry helps you purchase new coverage, switches your policy, and even cancels your old insurance!
Eric Schad
Answered on Nov 09, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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