If you’re looking for ways to save money on your car loan, refinancing could be the perfect solution. Whether falling interest rates have your attention or your credit score has improved, refinancing your loan can lower your monthly payments and reduce the amount of interest you’ll pay over time. This simple guide will walk you through the steps to refinance your car loan and help you decide if it’s the right move for you.

Refinance Your Car In 5 Easy Steps

Step One: Review Your Current Loan Terms

Before refinancing, it’s important to understand your current loan. Take a close look at your loan details, including the 1) remaining balance, 2) interest rate (APR), and 3) monthly payment. 

You also want to check if your current loan has a prepayment penalty. Some lenders charge a fee if you pay off your loan early, which could impact whether refinancing saves you money. If you don’t see a prepayment penalty mentioned on your online banking portal, you may need to give your lender a call to find out.

Step Two: Review Your Financial Picture

To get a better auto loan rate, you’ll first want to check your FICO credit score for improvement. It’s best to check your credit score for free with the three major credit bureaus: Experian, TransUnion, and Equifax. It’s normal to see slight differences between your three major credit scores. To qualify for a better rate, you’ll need an improved credit score, and in most cases, proof of income. Once you’ve reviewed your credit score and overall financial picture, you’re ready to shop for rates.

Step Three: Shop For Better Rates

Refinancing is all about finding better terms. It’s smart to compare rates from multiple lenders, including banks, and credit unions. Even if you’ve always used one particular bank, you’ll want to review offers from other lenders. Compare offers from multiple refinancing lenders with CarEdge.

Keep in mind that different lenders may offer different terms, and the lowest interest rate isn’t always the best option. Look at the full loan package, including fees and repayment terms, to find the best deal for your financial situation. It’s also smart to see how much a better rate will save you using a free refinancing calculator. 

Step Four: Apply For A Refinancing Loan

Once you’ve found the best refinancing offer, it’s time to apply for refinancing. Be ready to provide documentation such as your current loan details (including bank and account or loan number), proof of income, and information about your vehicle (VIN number, make, model, year, and mileage). Most lenders offer online applications, making the process quick and easy.

Step Five: Finalize Your Loan, And Rake In The Savings!

After your application is approved, your new lender will pay off your old loan, and your refinanced loan will take its place. From here, you’ll start making payments to your new lender at the lower rate. Be sure to set up auto-pay to ensure you never miss a payment on your new loan.

By refinancing, you’ll save money on interest and potentially lower your monthly payments, giving you more room in your budget. The process is simple, and the benefits can be huge over the long run. 

👉 Ready to get started? Compare offers from multiple lenders with CarEdge Refinance in minutes.