How to Refinance a Car Loan

Closeup of man signing a contract of car sale.

Have your monthly car payments become too much to handle? Looking to lower your interest rate? If so, you may be wondering how to refinance a car loan. Now, how do you refinance a car loan? The Mike Murphy Ford finance team provides you with all of the information you need to refinance your car loan in the Peoria area.

How Do You Refinance a Car Loan?

Why do East Peoria-area drivers need to know how to refinance a car loan? More often than not, the goal is to secure a lower interest rate, which in turn reduces how much you pay each month. How do you refinance a car loan, then? First and foremost, you need to determine how much you are currently paying. To do so, check your loan statements or get in touch directly with your lender to confirm figures. With this information readily available, complete the following:

  • Check Your Credit Score: As long as you have been making your car loan payments on time, it’s likely that your credit score has improved. If so, chances are that you can get a better interest rate by refinancing.
  • Apply for Refinancing: Submit refinancing applications within a 14-day period so as to avoid negative hits to your credit score.
  • Evaluate Your Offers: Compare your offers to see if any of them provide you with your desired monthly payment. Check out our monthly payment calculator for assistance if needed.
  • Decide on Your Loan Term: After reviewing your offers, decide between a longer- or shorter-term loan, depending on your individual financial situation. Remember that a short-term loan may come with larger monthly payments but less interest overall, whereas a long-term loan typically involves lower monthly payments but more interest over time.

What to Know When Refinancing Your Car

Here is what to know when refinancing your car to ensure that you’re making the best decision for you.

  • Fees: Some car loans come with fees for early payoff. Check your original loan to be sure there aren’t any fees involved.
  • Underwater Finances: How much is your car worth? How much do you still owe on your loan? If the remaining balance of your loan is higher than the vehicle’s value, you may have more trouble securing refinancing.
  • Older Vehicles: Many lenders won’t refinance an older car that has already experienced major depreciation.

Learn About Your Financing Options at Mike Murphy Ford

Pekin-area drivers can turn to the finance experts at Mike Murphy Ford to find out what you need to know when refinancing your car. We can also discuss new insurance options like gap insurance coverage. Don’t hesitate to get in touch with any questions!

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