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How does refinancing a car loan work?
How does the refinancing process work for a car loan? I’ve improved my financial situation a lot since I first took out the loan, and I’d like to refinance because I think I could find better terms. What do I need to do?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Refinancing a car loan will work differently for everyone as loans depend heavily on your financial situation.
That said, you can generally expect the process to work like this:
- First, you’ll want to check your credit. It sounds like your credit has probably improved since you first took out your loan, which means that you’ll most likely get a better rate on your loan!
- Next, gather the documents you need. This will include a copy of your driver’s license, your vehicle registration, proof of insurance, and proof of income, but your lender might ask for more specific documents.
- Make sure to shop around before settling on a loan. Make sure to look at the interest rate, repayment terms, fees, and any other elements of the loan contract that are important to you for each lender that you consider.
- Once you’ve chosen a lender, it’s time to apply for the new loan.
- If you’re accepted, you’ll sign the contract and your lender will pay off your old loan for you. Then, you can begin making payments to your new lender under the new terms.
Since your financial situation has improved, you may be able to get a better rate on your car insurance policy, too! The
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app can collect all of your information from your existing insurer in as little as 45 seconds, then show you quotes for comparable policies from more than 50 top providers, including Nationwide, Allstate, and Travelers. The average Jerry driver saves $879 a year on car insurance!MORE: Does refinancing a car hurt your credit score?
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- Gregory R.
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