<p>Refinancing a car loan means replacing your current loan obligations with another that has better terms. You can refinance your auto loan through a different lender or your current loan provider if they have an offer. The new loan will pay off the existing auto loan. Your monthly payments will then be made toward the new loan.</p>
<p>Application for loan refinancing is similar to the application for a new loan. The lender will require both financial and personal details to evaluate whether they should make you an offer and at what interest rate.</p>
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<p><img loading="lazy" class="aligncenter size-full wp-image-25450" src="https://tower.topcarfinancing.com/wp-content/uploads/2022/12/Sign-the-car-refinancing-contract.-Loan-business-and-loan-release.jpg" alt="Sign-the-car-refinancing-contract.-Loan-business-and-loan-release" width="600" height="400" srcset="https://tower.topcarfinancing.com/wp-content/uploads/2022/12/Sign-the-car-refinancing-contract.-Loan-business-and-loan-release.jpg 600w, https://tower.topcarfinancing.com/wp-content/uploads/2022/12/Sign-the-car-refinancing-contract.-Loan-business-and-loan-release-768x512.jpg 768w" sizes="(max-width: 600px) 100vw, 600px" /></p>
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<h3>When to Refinance a Loan?</h3>
<p>If you are currently under these circumstances, then refinancing your car loan may be worth it:</p>
<p>1. Your credit score has improved greatly since you last applied for a loan. A better credit score will get you more favorable offers.</p>
<p>2. You applied for your car loan at a time with higher interest rates than they currently are and your credit score has not declined.</p>
<p>3. You cannot stay on top of monthly payments and need more time to pay your car loan.</p>
<h3>Disadvantages of Refinancing a Loan</h3>
<p>Every financial move has its pros and cons. Let’s say that you are in a place where refinancing your car loan will give you a better rate, there are some downsides to consider before making this move.</p>
<p><strong>1. Time required to complete the loan application</strong></p>
<p>This is not entirely a huge disadvantage when you consider how much you can save from your new loan. However, you do need to spend some time organizing the required documents to apply for a loan. If you are looking for a faster way to get a loan, you can search for lenders with an online application process. There are also loan providers that can approve your application instantly and will even provide a lock-in rate.</p>
<p><strong>2. Your credit score will be affected</strong></p>
<p>The effect on your credit score will depend on the type of inquiry the lender makes. If the loan requires a hard credit check, you will see a temporary dip in your credit score. When you apply for a loan, ask the agent what kind of inquiry they will make for the application. The temporary hit your score takes should be something to consider if your score is fluctuating between two different score ranges (fair and bad; fair and good) or if you are planning to apply for other loans as well.</p>
<p><strong>3. Other risks associated with refinancing</strong></p>
<p>The biggest risk associated with any type of loan is not being able to keep up with the payments. It is a common mistake for borrowers to apply for a loan without sufficient knowledge and preparation. You should do proper research on the current rates and how your credit score will affect the offers that you receive. Tools are available online to help you estimate what rates will be offered with your current credit health.</p>
<h3>Loan Terms and Rates</h3>
<p>LendingTree is an online marketplace where you can find various rates from leading loan providers in the country. For example, you are currently residing in North Carolina, and have a credit score ranging from 680 to 719, a $25,000 loan amount. These are the sample rates you can expect to refinance your car loan:</p>
<table>
<tbody>
<tr>
<td><strong>Term</strong></td>
<td><strong>Min. APR</strong></td>
<td><strong>Monthly Payment</strong></td>
</tr>
<tr>
<td> 24 months</td>
<td>1.99%</td>
<td>$1,063</td>
</tr>
<tr>
<td>36 months</td>
<td>1.99%</td>
<td>  $716</td>
</tr>
<tr>
<td>48 months</td>
<td>1.99%</td>
<td>  $542</td>
</tr>
<tr>
<td>60 months</td>
<td>1.99%</td>
<td> $438</td>
</tr>
<tr>
<td>72 months</td>
<td> 2.49%</td>
<td>$374</td>
</tr>
<tr>
<td width="213"> 84 months</td>
<td width="213">2.49%</td>
<td width="213">$325</td>
</tr>
</tbody>
</table>
<p>When we change the location to New York or Los Angeles and use the same credit score, the rates available are close to the above displayed. With an excellent credit score, it is possible to get a 72-month term with a 1.99% APR.</p>
<h3>Should You Refinance Your Car Loan?</h3>
<p>Using the sample calculations above, you can start evaluating whether refinancing your loan is the best move. If you are looking for an extension to pay your car loan or if you found better rates than your original loan, then you can consider making this move. Your original loan might have been approved when you only had a fair credit rating. Make sure to do proper research on the types of lenders that you can work with and whether their offers will be more beneficial in the long run.</p>


How Car Loan Refinancing Works And How You Can Save

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How Car Loan Refinancing Works And How You Can Save

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How Car Loan Refinancing Works And How You Can Save

Quick Approval

Low Rates

Fully Online Application

How Car Loan Refinancing Works And How You Can Save