When Is a Good Time To Refinance Your Auto Loan?

Auto loans can account for a large amount of monthly bills in most households, but fortunately, they can be minimized if you have the right resources available. Are you a good candidate for an auto loan refinance and, if so, when is it the right time to refinance your auto loan? Here are a few things to consider when refinancing your auto loan.

It may be time to refinance your auto loan, if:

• Your credit score has improved, qualifying you for lower interest rates.

• Your credit score is above 600, which can also lower your interest rates.
• Interest rates have dropped. New, lower interest rates can make a huge difference on monthly payments.
• Your car lease is expiring and you want to purchase the car.
• Your personal finances have changed for the worst due to medical bills from an unexpected accident, losing your job, or emergency house repairs.

It is important to make sure that the vehicle is worth more than what is left on the loan. Refer to Kelley Blue Book, Edmunds, or AutoTrader to assess car’s value. Also, consider if there are any penalties for paying the loan off early, how old the car is, and the remaining balance on the loan. Most lenders will not refinance any vehicle older than seven years old or with no more than $40,000 remaining balance.

When shopping for better rates it is important to look at two or more lenders to make sure that you are getting the lowest rates possible. Most banks and credit unions offer competitive interest rates and incentives for auto loans, like Bank of America, Genisys Credit Union, or PNC Bank. Also, if you are open to selecting “Auto Pay” when applying, you will receive the lowest interest rate possible, given your situation.

The time to refinance your car loan may arise for any number of reasons. Regardless of the reason, remember to take your time, do your research, and have the necessary information and documents available when you’re ready to refinance your auto loan.