What does refinancing a car loan mean?

I have a car loan with an interest rate of 11.99%. This seems high to me, and my credit union agent told me that I should apply for refinancing with them. What does this mean?

Answer
That’s very savvy of you to take notice of your sky-high interest rate! The good news is that refinancing a car loan could be the answer to help you save money.
Refinancing a car loan is an almost identical process to getting a car loan. The only difference is that you already have a car loan and are just shopping for another lender so you can lower your monthly payments and interest rate.
To refinance your vehicle and get rid of that scary 11.99% interest rate, follow these tips:
  • Check your credit score to see if you need to pay down debt
  • Learn your current loan balance and value of your vehicle to assess if you’re upside down on your car loan
  • Make sure your current lender has no prepayment penalties
  • Shop around for the best rate
After shopping around, you should be able to find the best rate at a better price. Make sure to do the same with your car insurance. By using the Jerry app, you can compare quotes to find the best rate for your car insurance and save even more money when combined with your new lower-interest car loan.
Eric Schad
Answered on Nov 16, 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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