What does it mean to refinance a car and why would you do it? Refinancing your car loan isn’t taboo but something you should do often over the life of your loan. Who wants to be a slave to the lender anyway?
When you refinance, you’re replacing the current loan with a new set of terms. In essence, you’re helping yourself save money, and often times shorten the loan.
People will refinance a car loan to save on monthly payments, reduce interest rates or adjust the loan term length, as mentioned above. Plus, more money means more pizza you can buy!
Outcomes from Refinancing Your Car
No matter the reason and whatever the motivation, it’s important you understand what this means for you, and the possible outcomes.
As described before, one of the main reasons to refinance your car loan is to lower the monthly payments. Now, this may seem like a good idea but it’s important to remember the two ways you can do this: extend the loan term or just get a lower interest rate.
If you extend your loan, you’re almost certain to pay more for your car over the next few years. Just speak with the lender and weigh your options.
When refinancing your car loan, you don’t have to stay with your lender. Shop around and see what kind of interest rate you can get. If your credit score has increased since the first day you bought your car, you’re due for a better interest rate.
Sometimes, the lender will give you a lower interest rate while shortening the loan term which is a huge win for you!
No matter the length of loan you’ve chosen for your car, making payments on time is one sure way to give you an edge when you refinance.
If you find yourself in a bind to make a payment one month, Lift Credit can help you meet your financial needs. Come learn how we’ve already helped thousands keep making their car payments so they don’t miss out on refinancing.