How to Refinance a Car Loan

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Are you looking for ways to lower your monthly car payments and reduce the interest rate on your auto loan? If so, refinancing your car loan may be the right choice for you. Below, the finance team at Mercedes-Benz of St. Louis covers how to refinance a car loan. Read on to learn more about the steps involved and what you need to know!

Refinancing a Car Loan: Step by Step

When you want to lower the interest rate you’re paying, refinancing your auto loan can help you achieve that goal. Be sure to confirm your loan rate and monthly payment amount with your lender before moving forward. So, how do you refinance a car loan? Follow the steps below:

  • Check Your Credit Score: Have you been paying your bills on time since you purchased your car? If so, your credit may have improved. Refinancing could be a beneficial choice for you.
  • Submit Applications: When you’re ready, start submitting loan applications to different automotive refinance companies. Schedule your application submissions within a 14-day window to help minimize the ding to your credit score.
  • Review Offers: Do the math and make sure the offers you’re receiving match the interest rate and monthly payment amount you want. Use our online monthly payment calculator to help you run the numbers.
  • Choose a Loan Term: You’ll need to decide on a short or long term for your loan. With a short-term loan, you can expect to pay more monthly, but less in total. With a long-term loan, your monthly payments will be smaller, but you’ll pay more in interest.

The right refinancing terms for you will likely differ from another driver’s — and that’s okay. Make sure you’re choosing the best offer and terms for your situation.

What to Know When Refinancing Your Car

If you’re deciding whether to refinance your car, you’ll want to consider a few possible scenarios before you make a decision:

  • Fees: Some automotive loan companies charge fees for early repayment. If that’s the case with your loan company, refinancing may not be the best option for you.
  • Underwater Finances: Do you owe more on your car than what it’s worth? If so, you’ll likely finder it harder to get approved for refinancing.
  • Older Vehicles: Some lenders don’t refinance older cars that have already depreciated in value.

If you’ve run into any of the above-listed problems, the finance experts at Mercedes-Benz of St. Louis can help! Our team can give you advice and answer any questions you may have about your best course of action.

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Explore Your Financing Options at Mercedes-Benz of St. Louis

Is now the time to refinance your auto loan? Contact us to speak with one of our finance experts, and we’ll provide more information on the best way to refinance an auto loan. For more car buying tips, review our information hub and learn more about topics like car financing and insurance.

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