How To Look Into Refinancing My Auto With a Lower Interest Rate

Refinancing a car loan requires you to apply to another lender to pay off your old loan so you can start a new one. Refinancing is beneficial to some, as interest rates, credit standing or needs can change, and a refinance can accommodate save you money over the loan term or lower your monthly payment. When looking into refinancing, you should shop as you did for your original car loan.

Instructions

1

Call your current lender to determine the vehicle's payoff amount. Ask for a 10 or 15 day payoff so the amount due includes daily interest charges, known as the per-diem. The amount stated is the amount you'll have to pay to end your current loan.

2

Check your funds. You do not have to finance the entire payoff, as you can put money down--this can lower your payment if you were limited at the time you financed your car. If your situation has changed and you want to put money down for the refinance, you can do so, and instead of paying a higher monthly payment no matter how much you pay towards the loan, you can lower your payment by borrowing less.

3

Use an auto loan calculator to determine a new monthly payment based on extending your term, putting money down or lowering your interest rate. The Edmunds website offers one to use. Take out the taxes and fees when calculating.

4

Check the rates for used car loans in your area. Contact the bank where you have your checking account, credit unions and other banks of interest. Many banks offer rates on their websites, or, call to find out if you do not see the rates listed.

5

Visit the websites of the banks you're considering, as some may offer perks worthwhile to you. You will have to open an account at the bank you choose, so if some offer cash back on purchases, reward debit cards, travel miles or local discounts, this can help you to decide which bank to use.

6

Call or go to the bank you've chosen. Have your vehicle's VIN (vehicle identification number), year, make, model, level, options (such as leather or sunroof), mileage and payoff amount ready to give to your loan representative. Tell her you want a pre-approval for a refinance.

7

Ask the representative figure your new monthly payments if you are approved and have decided to refinance. Assume that you will be approved at other banks as well so think carefully before signing the papers. If you find that the refinance payments are attractive, you can complete the application process.