How to Refinance a Car Loan

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If lowering your monthly car payments and saving on interest sounds appealing to you – and we’re sure it does – you may want to consider refinancing your vehicle. So, how do you refinance a car loan? At BMW of West St Louis, we cover what to know when refinancing your car to help make your auto loan as affordable as possible.

How Do You Refinance a Car Loan?

Lowering the interest rate you are being charged each month is the main goal of refinancing a loan. Because of this, you need to know your current interest rate. Consult your loan documents or contact your lender to find this information. When you have everything you need, follow the steps listed below.

  • Check Your Credit Score: If you have been paying all your bills on time since your vehicle was purchased, it is likely that your score has improved over time. If this is the case, it is likely in your best interest to refinance your vehicle.
  • Start Applying: To make sure you are getting the best rate possible in the Ballwin area, apply to several lenders in a short period of time. You want to submit all applications within 14 days to minimize the hit on your credit score.
  • Evaluate Offers: Evaluate all of your offers to make sure you are getting the monthly payment you desire before making a final decision.
  • Decide Loan Term: Weigh the pros and cons of a shorter loan term and a longer loan term. If you opt for a shorter term loan, your monthly payment will be larger, but you will end up paying less in interest over time. With a longer term loan, you will have smaller monthly payments, but over the course of the loan, you will pay more in interest.

What to Know When Refinancing Your Car

Before you refinance your car, there are a few facts to keep in mind:

  • Fees: Check your original car loan to see if there are any fees associated with paying the loan off early. If that is the case, refinancing your loan may not be worth it.
  • Underwater Finances: If you owe more on the loan than the current value of your vehicle, getting approved for refinancing can be a challenge.
  • Older Vehicles: If you drive an older vehicle that has already undergone steep depreciation, you may not be able to refinance.

If any of the situations above apply to you, don’t worry. Consult the finance experts at BMW of West St Louis. We can review your options to help you determine the best possible path.

Financing is Hassle-Free at BMW of West St Louis

Our finance experts are here to discuss what you need to know when refinancing your car. Ready for an upgrade? Learn how to trade in your car today? We want to make sure the automotive financing process is a stress-free experience. Contact us today for more information.

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