How to Refinance My Auto

You're the proud owner of a brand-new auto but the interest rate on the loan you got from your dealer is sky high. If you have a good job, better than average credit, have been making auto loan payments for at least three to six months, and have not moved in the last six months, you may qualify for an auto refinance. Even if you have bad credit, a discharged bankruptcy or other liens on your name, you can refinance your car and drive away with bigger savings.

Instructions

1

Gather information necessary for an auto refinance, such as your current auto loan contract and the account number, the exact name and spelling of the owner of the auto, the year, make, model and vehicle identification number (VIN), and any modifications that were made to the auto since you bought it.

2

Obtain a copy of your credit report from Experian or Equifax and look at it closely. Get old addresses removed, correct any errors and close old accounts before applying for auto refinancing. Your credit score, debt-to-loan ratio and your past payment history will be examined before a lender will qualify you and lock you into an interest rate.

3

Call your current auto loan company and get the loan payoff amount and the date it'll expire. Find out if there's a prepayment penalty and how the interest has been calculated. Read your current loan contract to find out if you can get an interest refund for paying off the loan early.

4

Request free refinance quotes from My Auto Loan or Bankrate.com and compare rates and fees from several companies. Alternatively, visit local credit unions and ask about their rates. Credit unions can offer interest rates at about 2 percent lower than commercial banks, and you can be approved over the phone in a matter of minutes.

5

Refinance your auto if you can get a simple interest loan at a rate at least 1% lower than your existing loan. Ask for a detailed itemization of loan and title fees before you sign on the dotted line. Punch numbers on an online calculator to get an idea of what your monthly payments will be. Auto refinance loans may provide lower monthly payments, but may cost you more in the long run because they may be stretched out longer than your original loan.