If you have an existing car loan, you may be thinking about refinancing it for a number of different reasons. The most obvious are to reduce your interest rate, lower your monthly payment, or to pull out cash equity. Before you sign on the dotted line, here are some necessary questions that you’ll want to ask for Refinancing a Car Loan.
What Interest Rate Can I Get?
According to Lantern by SoFi, “…applicants could qualify for a lower interest rate through refinancing—which could mean lower monthly payments and saving money in the long run.” You’ll want to start by comparing auto loan rates with Lantern. This can allow you to determine which lenders are offering the lowest interest rate possible for your car loan refinance.
What Will My New Payment Be?
You never want to agree to a loan without understanding what the monthly payment will be and how it will affect your current budget. If your intent of refinancing your vehicle loan is to get a lower monthly payment, you want to ensure that your new payment amount is indeed less than your existing one. Any car loan lender should be able to easily provide you with an estimated payment amount for your car loan refinance.
What Additional Fees Are There?
While it would be nice if there were no fees to refinance your vehicle, that’s simply not the case. Every lender is going to charge money for their time spent on reviewing and approving your loan application. You’ll want to go into getting a car loan refinanced by first knowing what additional fees you’ll be responsible for paying. Most of the time, lenders will wrap these additional fees into the overall loan amount that they lend you. This can make it super easy to overlook these fees when you’re refinancing your loan.
How Long Will My New Loan Last?
Another necessary question to ask any potential refinance lender for your auto loan is how long the loan will be. Most lenders will give you various options ranging from three to five years in length. If you’re looking solely to refinance to lower your monthly payment amount, it’s highly likely that you’re going to go with the longer term amount. However, realize that interest rates tend to be lower when you opt for a shorter term length.
What Credit Score Do I Need?
Most car loan lenders will require you to have a minimum credit score rating. This is typically posted on their website or can be answered by one of their loan applicant representatives. You should understand the minimum credit score requirements to ensure that your credit score is high enough to be approved for the loan. If it’s not, you’ll want to work on boosting your credit score before refinancing your existing vehicle loan.
Having the ability to refinance your existing vehicle loan is a great option for many reasons. However, you’ll want to ensure that you ask every one of the questions above before deciding on a specific loan and lender to go with.