How to Refinance an Auto Loan

Often when people find themselves faced with unmanageable monthly payments, they immediately think of refinancing their home loan. Many do not realize that refinancing a vehicle loan is a safer, less time-consuming way to free up income and effectively manage debt. An informed borrower with satisfactory credit history can often negotiate new terms and lower monthly payments.

1. First: Gather vehicle info and loan documents

   Refinancing is a major decision, and you want to feel prepared when you first meet with a lender. Gather your vehicle title and original loan agreement, as well as basic information abut your vehicle: Vehicle Identification Number, service records and registration and inspection history. Consider having your vehicle appraised, and contact your present lender for the specific payoff amount owed on your vehicle. Different lenders may require different documents, so call ahead to find out.

2. Second: Research lenders

   Meet with multiple lenders to explore all available rates and options; many finance professionals recommend consulting no less than 10 companies. Lenders generally base their rates on a number of factors, including your current credit score, payoff amount and outstanding debt. If you have a difficult time getting off work or meeting in-person, you can also use the internet to seek out the best interest rates and refinancing options. Take note of offered Annual Percentage Rates, which are used to easily compare different lenders' packages.

3. Third: Update your loan information

   To avoid legal and financial problems down the road, provide updated loan information to your vehicle insurance agent. If applicable, update your lien information to reflect the new financing terms as well.