What is car refinancing?

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Woman with computer refinancing a car

If you are interested in managing the cost of your vehicle loan, automatic refinancing is an option you should consider. *

Refinance a car is the process of taking out a new loan to replace an existing note. The refinanced loan is a new contract, typically with another lender, which gives you the ability to accept different terms. In many cases, the borrower will refinance to save money on interest or get a more comfortable monthly payment.

Here are four common scenarios.

Lower monthly payment – Refinancing can reduce the monthly payment due to a lower interest rate, long-term or both.

Lower interest rate – A reduced rate, with an equal or shorter loan period, usually means that you will pay less total interest over the life of the loan.

Longer loan term – Depending on the interest rate, increasing the duration of the loan will reduce the monthly payment. However, a longer term may result in a higher interest fee.

Shorter loan term – On the contrary, the shortening of the duration could increase the monthly payment but reduce the total interest.

When car refinancing makes sense

Refinancing can be of particular interest when one of the following conditions applies:

  • Your credit score has improved – A best score it may allow you to benefit from a lower interest rate and a lower APR.
  • Market rates have fallen – Even a drop of one or two percentage points could result in a decent saving.
  • You haven’t gotten the best deal to start with – Refinancing with a lender like Road loans it might give you better conditions than you originally had.
  • Your financial situation has changed – A budget change could make a lower monthly payment a priority. Alternatively, you may have the means to pay for the car faster with a larger payout.

Whatever your situation, use a refinance calculator to get a better idea of ​​how the refinance adds up. Road Loans’ online calculator allows you to enter the details of your current loan along with the terms of a new one and adjust the parameters as you go. Once entered, it will show you the difference between the current and the new installment, the total interest expense and any savings.

Here are a couple more things to consider when calculating a refinance:

  • Time remaining on your current contract – Interest expense typically decreases over the course of a loan, so if you’re a good way to enter into the contract, any savings may be limited.
  • Advance payment penalties – Some lenders will charge a prepayment penalty to pay off the loan early. If you are subject to such a fine, compare it to your savings to see if refinancing still makes sense. RoadLoans car loans do not include penalties for an advance payment.

Enjoy easy automatic car refinancing

Refinancing a car loan can accomplish a number of goals and is often an easy way to save money or adapt to changing circumstances. Even if you have recently taken out a loan, there is no waiting period before you can apply for a refinance. At RoadLoans, we offer a streamlined process that starts with a short, online application and immediate decisions. † Your vehicle must be seven years old or older, have fewer than 105,000 miles and a refinancing amount of $ 5,000 ($ 6,000 in California, $ 6,001 in Massachusetts) to $ 75,000. If approved, all you need to do is complete and return the loan forms and let us take care of the rest.

To apply for online car refinancing.

* These statements are informational suggestions only alone and should not be construed as legal, accounting or professional advice, nor are they intended as a substitute for legal or professional guidance.

RoadLoans is not a credit advisory service and makes no representations regarding the responsible use or restoration of consumer credit.

† RoadLoans does not accept refinancing requests from Santander Auto Finance and Chrysler Capital clients.

Written by: Rob Looker

This article was published by: Rob Looker by title: What is car refinancing?


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