How to Refinance the Interest Rate on a Car Loan

Auto loan interest rates fluctuate almost as much as the weather; one week they're at an all-time high, while the next week may bring all-time lows. If you financed your vehicle with a higher interest rate loan, it may be possible to lower your payments and save on finance charges by refinancing.

Instructions

1

Contact your lender to receive a payoff quote on your existing auto loan. The payoff amount is how much you will need to borrow under a new loan to swap it over. Most lenders will grant you a payoff quote over the telephone, and some will let you access online.

2

Compare interest rates between banks. Always give your existing lender an opportunity to offer a lower rate. They want to keep your business and may be competitive with other banks. Get quotes from three to five auto lenders. Check with your local bank and with online banks. See the resources below for some online refinancing options.

3

Compare the terms of each refinance offer and make sure they fit within your budget. Just because an interest rate is lower doesn't mean the payment will be lower. The loan term can make a difference in payments. Decide what term (typically 36 to 60 months for refinancing) suits your needs.

4

Complete the financing by signing the new auto loan documents. Many lenders will require additional documentation before finalizing a loan, such as insurance verification and proof of income. Make sure you change the lienholder on your insurance policy to reflect the new loan if you have changed banks.