How Do I Refinance My Car Loan?

Aside from your home in Medford or Sewell, your car loan is probably your biggest life expense. If you’re interested in lowering your monthly payment and saving on interest, refinancing your car loan is the way to go. Similar to refinancing your home loan, getting a lower interest rate on your car loan is a smart way to get the most out of your monthly budget.

How to Lower Your Car Loan Interest Rate

If you have an existing car loan, you’ll want to do a little research, and compare your current interest rate to available interest rates. On average, you can reduce your interest rate by 2.4% by refinancing your car loan. 2.4% might not seem like much, but for a $32,000 vehicle with an average loan term of 68 months, that adds up to over $2,300 in savings over the span of the loan. Ready to start saving? Here’s what you need to know:

1. Check your credit score: Knowing your credit score can help you understand available interest rates. If you’ve been diligent in paying all your bills on time you’ll benefit from a higher credit score which means lower interest rates for your new loan.
2. Work on your score: If your credit score needs a boost, spend a little time working on increasing your score so you can take advantage of lower interest rates when you apply for your loan.
3. Consider your refinancing options: If you have an existing car loan and think your credit score can help you get a lower interest rate, now might be the time to refinance. Compare your current interest rate to available interest rates based on your credit score. The team at the Acura Turnersville can help you with this step.
4. Decide on a loan term length: Weigh out your options to see if a longer or shorter loan term is best for you. A shorter loan term might make your monthly payments higher, but you’ll save in interest by paying the loan off quicker. While a longer term loan might give you smaller monthly payments, you’ll end up paying more in interest because the loan period is longer.

What is a Good Interest Rate?

Your loan interest rate depends on a variety of factors, including your credit score and the loan amount. Interest rates can vary widely. Cherry Hill-area drivers typically see a range of 3.2% to 12.9%.Take a look at potential interest rates based on your credit score range:

• A credit score between 740-800 can expect a 3.2% interest rate (on average)
• A credit score between 680-739 can expect a 4.5% interest rate (on average)
• And a credit score of 680 and below can expect a 6.5%-12.9% interest rate (on average)

What to Know When Refinancing Your Car Loan

While you’re deciding whether refinancing your car loan is the right move for you, here are a few more points for you to consider:

• There are often fees for early repayment, just as there are fees for starting and filing a new loan. Read the fine print and make sure that you can afford these expenses.
• Do you owe more on your auto loan than your vehicle is currently worth? If so, you’re under water. You’ll have a harder time refinancing.
• Older vehicles are not strong assets, so lenders will be less likely to consider them for refinancing. The same is true if you drive a car with high mileage.

Maybe you find that you’d prefer to trade in a financed car for a lease. Although it is possible to lease with bad credit, you’ll want to be as prepared as you can be, going in.

Need More Advice About Refinancing Your Car Loan? Ask Acura Turnersville!

To learn more about refinancing your car loan and finding your interest rate based on your credit score, feel free to contact the team at Acura Turnersville near Maple Shade. You can also get pre-approved by applying for financing online, learn about certified pre-owned vs. used models, how much gap insurance costs, and more. We can even go over how to trade in your car if you’ve never done that before!