Media post: Step-by-Step Guide to Auto Refinancing

If you’re currently paying off a car loan, you might be wondering if you’re stuck with the same interest rate and monthly payments for the entire term. And guess what? You’re in luck because you’re not.

Auto refinancing offers a practical way to save money, reduce monthly payments, or shorten your loan term. If you’ve seen improvements in your credit score or the interest rates, it only makes sense to make use of this tool. But how do you begin?

Let’s break it all down into clear, actionable steps.

Step 1: Know When to Refinance

Not every car owner benefits from refinancing. Some situations and circumstances matter when you’re making the decision.

One situation where refinancing makes sense is when your credit score has improved. Lenders offer better rates to borrowers with higher scores. Also, if the general interest rates have dropped, the decrease in loan rates can save you money.

If you’re struggling with your current monthly payments, extending your loan term with a refinance may help. Ideally, refinance in the first half of your loan term when you’re still paying more interest than principal.

Step 2: Check Your Credit and Loan Details

Refinancing options depend heavily on your credit profile. Before looking for lenders, check your credit score. Most lenders, including those associated with RefiJet, look for a score of 600 or higher.

Review your current loan by checking your balance, interest rate, monthly payment, and remaining term. And lastly, check your car’s value. You can use online tools to estimate the current value of your vehicle.

Step 3: Gather Required Documents

Lenders need specific information to determine if you qualify, including proof of income, current loan details, and vehicle information.

Having everything ready speeds up the process and shows lenders you’re serious. Also, many of them offer a prequalification process. This is a soft inquiry, meaning it won’t impact your credit score.

You can get an auto refinance prequalify to see estimated rates, compare offers from multiple lenders, and get a feel for what kind of monthly payments and terms you’re eligible for.

After prequalifying, you’ll have a better idea of what to expect and can move forward confidently.

Step 4: Compare and Apply

Don’t just go with the first offer you see. Take your time to compare interest rate (the lower, the better), loan term, monthly payment (does it fit your current budget?), and the total cost of the loan.

Once you’ve picked the best offer, it’s time to officially apply. This step will usually involve a hard credit inquiry, so your score might temporarily drop a few points. Make sure you have everything ready and on hand to save time.

Step 5: Finalize the New Loan

After approval, your new lender will pay off your old loan. From there, you can start making payments to your new lender, keep track of your loan term and interest, and stay on top of due dates to avoid late fees.

If you do everything right, refinancing can feel like a much-needed financial relief and reset with less stress and more breathing room.