Steps to Refinancing a Car Loan

Refinancing is not just for home mortgages. Save money on your car payment by refinancing a car loan. It's not nearly as complicated as you might think.

Internet companies, such as eloan//home make car loan refinancing so simple, it can be completed in minutes.

Why Refinance?

When you bought your car, you might have been stuck with a high interest rate. This could have been for a variety of reasons. Maybe the rates were high at the time. Or possibly your credit wasn't as good as it could have been. Refinancing a car loan is essentially the process of paying off a loan set at one interest rate and term with a new loan at another interest rate and term. People refinance their cars for the same reasons they refinance their home loans.

Lower Payments, Reduce Interest Rates, And Shorten Term. The smart consumer doesn't just save money at the time of purchase. They refinance car loans within a year of purchase to enjoy even lower monthly cash outlays, keeping more of their money at the end of the month.

Take a look at the savings: a $15,000 loan at 21% APR for 30 months costs the buyer $646.95 per month. Refinancing just the interest to 5.59% saves the buyer over $100 per month, reducing their payment to $536.91. This buyer now has an additional $1,200 per year in their pocket, thanks to a smart refinance.

Improved Credit Status. Sometimes a couple of scrapes on your credit will hurt you at the dealership when you first buy that car. You might get saddled with a loan that has a longer term and higher interest rate than you'd originally hoped for. Diligently working at improving your credit over a six-to twelve-month period, then refinancing will save you money and boost your credit score.

Additional Savings. Buying a car with a higher interest rate or a longer term might have been necessary to get the dealer rebate, incentive or special price on the car. Refinancing that loan a month or two later, after reaping the benefit of the incentive, will add additional savings to this smart shopper's wallet.

How Do I Refinance My Loan?

The process involved in refinancing a car loan is relatively easy. First, you might want to do some research. See who's got the best deal. Remember, you can't refinance your car loan using the same finance company that holds your current loan. Shopping around is a necessity in this game. You'll save more money by refinancing online, both on APR and on fees, not to mention saving yourself the hassle of dealing with a salesperson. Online lending has really streamlined the process, so don't be afraid to see what's out there. Check out Edmunds//home or capitaloneautofinance//home to find out what kind of programs they have available to consumers interested in refinancing their car loan. An appraisal is not necessary to refinance your car loan. Simply fill out the application and you can receive a response in minutes.

Continue to: Steps to Follow for Car Loan Refinancing