5 Questions to Ask When Refinancing Your Car Loan
Refinancing to a better car loan can mean big savings: on average, you can lower your APR by 2.4% and lower your monthly car payments by $52 per month – that’s over $600 per year. That’s why we recommend seeing how much you could save by pre-qualifying for refinancing a car loan. It just takes a few minutes, and there’s no effect on your credit score. Whether or not you refinance your car loan through us at Outside Financial, we want to make sure you do it right. Here are our top 5 questions to ask:
1. How can I get the best auto loan interest rate when I refinance?
You need to shop around. If you like your local credit union or bank, check to see whether they offer auto loan interest rates lower than your current loan. To maximize your options, it’s smart to check with a few lenders. We help you to compare your auto loan interest rates with our network of lenders all at once. You can see if one of our lenders can find you a better car loan, without affecting your credit score.
2. Can I extend my auto loan term when I refinance?
Definitely. In fact, about 75% of people extend their auto loan term with their new loan. Keep in mind that extending your term may reduce your monthly car payment, but will likely mean a higher interest rate. That means you’ll be paying more over the life of the loan.
3. Are there big fees to refinance my car loan?
Generally not, and if a provider charges you big fees, that’s a good indication it’s not a good provider. Always read the paperwork carefully. At Outside Financial, we never charge you a fee to refinance your auto loan. Auto refinancing fees for documents and title transfer are usually well under $100. Considering the average savings on your monthly car payment is $52, your budget will come out ahead in less than 2 months.
4. Is it complicated to pay off my old car loan when I refinance?
No. If you’re approved, your new auto lender will handle paying off your old lender and take care of all the documentation. The new documents will require your signature, but you should not need to do a bunch of legwork.
5. Why did I get the wrong car loan at the dealer?
Markups. Most people buy their cars at car dealerships, and most of those buyers get their car loans at car dealerships too. Here’s the problem: on average, we estimate a loan package on a new car from a dealership contains over $1,700 in poorly disclosed fees and markups. You can see the math on car dealer markups here. Refinancing your loan can mean removing some or all of the dealer markup from your principal loan balance.
Auto loan refinancing is a smart move
Congratulations! You’re ahead of the game if you’re reading this at all – most people don’t even realize car loan refinancing is an option. We created Outside Financial and work hard every day to ensure that car buyers and owners like you understand their car loan options, and have a trusted place to refinance their existing car loans or arrange a fair car loan package before they go to the dealership.