Car loans are a good option for borrowers who cannot afford to pay the total cost of a car. These loans are available for both new and used vehicles. The interest rate you pay depends on what your credit history looks like and your credit score. You do not need to stick with the same interest rate you had when you applied for your loan, especially if you have improved your credit recently. Refinancing allows you to change the terms of your loan, which can help you pay less each month or pay off your loan faster. Many people find that refinancing their car loans is easier than they thought.
Why Refinance an Auto Loan?
The biggest reason to refinance your loan is that you can save money. If you qualify for a better and lower interest rate, you’ll pay less in interest by the time you make your final payment. You can keep making the same payments every month and pay off your loan much faster, too. Using a car refinance calculator is an easy way to see your new interest rate and loan term vs. your old loan. According to the experts at Lantern by SoFi, “Your refinance auto loan term can be for the same remaining term or changed.”
When should you Refinance?
A big question that some borrowers have is when they should refinance their loans. The best time is when your credit score changes from the one you had when you applied. Even improving your score by a few points can help you save a bundle of interest in the coming years. It’s also smart to refinance if you applied with another person and no longer need their help. You might take a former spouse’s name off the loan after a divorce or remove a parent’s name when they want to buy a new house.
What Do You Need?
According to the experts at Lantern by SoFi, using a car refinance calculator is an easy way to compare rates from some of the top lenders. All you need to enter is the total left on your loan and your monthly payment, as well as your current interest rate. You can then enter the new annual interest rate you would like and the terms you want. After the required information has been provided, the calculator will check with lenders who meet your terms and show you what you can get. Within a few minutes after using an online calculator, you will know if refinancing is your best option.
Are There Any Drawbacks to Refinancing?
Make sure you know the potential drawbacks of refinancing your auto loan. One of the biggest risks is that you won’t qualify. This often happens when you owe more on your car than it is worth. Another issue is that the original lender may require that you pay the penalty to move to a different lender. You might already have the best rate, and you may not qualify for a lower rate. It’s easy to refinance your car because you can use an online calculator to compare rates. Try the Lantern by SoFi calculator today to see if refinancing will help you.
