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How does refinancing on a car loan work?
I'm thinking of refinancing a car based on suggestions from my stepdad, but I have no idea how that works. What’s the process of refinancing a car like?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Good question! Refinancing is a way to get a new
car loan
to pay off your old car loan, but at a better interest rate. Luckily, refinancing works almost identically to getting an initial loan. The only major difference is that you’ll need information on your existing car loan, including:- Interest rate
- Balance left on the loan
- Length of time left on the loan
The process is often used by people who:
- Signed a car loan with a high interest rate, but whose credit has improved.
- Want to extend their car loan to get lower monthly payments.
- Want to get a cash-out refinance, or take extra cash out based on their positive equity.
And just like a car loan, you should also shop around for the best rate possible. Make sure to check all online lenders, banks, and credit unions to get the best interest rate for your car loan needs.
Just remember that you also need to maintain full coverage car insurance for the duration of your refinancing. To get the best deal possible, check out the
Jerry
app. Compare quotes from over 50 insurers to make sure you’re getting the best deal possible—and once you find a plan you like, switch easily with help from our friendly agents!Best of luck with the refinancing!
MORE: How to refinance a car
View full answer
- Gregory R.
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