What does refinancing a car mean?

"I purchased a car about a year ago. Because of my poor credit, my interest rate was 9.75%.

I was told to refinance my vehicle, but I'm not sure what this entails.

What does refinancing a car mean?"

Answer
“To refinance a car, you take out a new loan with a lower interest rate to pay off your older loan that has a higher interest rate. Benefits of refinancing can include a lower interest rate, a lower monthly payment, or even a different loan length.
The process of refinancing a car is the same as getting a car loan. You have to qualify for the loan just as you did the first time. The lender will pull a hard inquiry on your credit report, so be prepared for a slight hit to your score.
As you would with other types of loans, shop around to find the best interest rate possible.”
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Eric Schad
Answered on Jun 17, 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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