The Best Way to Refinance an Automobile Loan
- 1). Check your credit report and score. Order your credit report from Annual Credit Report, a website managed by major credit bureaus Experian, Equifax and TransUnion, The site offers free credit reports under the terms of the Fair Credit Reporting Act. You're entitled to one free credit report every 12 months from each of the credit bureaus. After receiving your credit report, follow the instructions to order your credit score, separately, for a fee.
- 2). Confirm that your credit score is likely to qualify you for a competitive rate on an auto refinance. Delay plans to refinance if your score is below 620 and work on improving your credit instead. If you must refinance now, forge ahead with your current score as you shop for the best deal.
- 3). Review your current loan documents. Check the interest rate and determine if you will be charged a fee for paying your current loan off early. Bankrate reports that paying the loan off early could cost you up to a few hundred dollars in fees -- a important point to consider as you evaluate the overall cost of the refinancing.
- 4). Determine the value of the car and compare that against your current loan balance. Bankrate reports that refinancing will be difficult if you owe more on the car than it is worth.Visit an online vehicle valuation website such as Kelly Blue Book for a free estimate of your car's value.
- 5). Shop around for a new loan. Contact several banks and credit unions by telephone or in person. Tell the loan officer about your credit score, your current monthly payment and the balance owed on the present loan. Ask about interest rates and fees.
- 6). Apply for a loan from two or three lenders. Then compare the approved offers -- including interest rates and all fees -- and take the best overall deal.
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