What does refinancing an auto loan cost?
Refinancing your auto loan does not have a cost per se, but there may be costs involved in the process depending on your situation. The goal of refinancing is usually to save money each month by reducing your loan payment. Let’s see how it works and what it could cost you.
What is refinancing?
Refinancing is a process used to secure a new loan agreement on your existing vehicle. This is often done through a new lender, but you can check with your current lender if they have refinancing options.
The goal is to save you money on your monthly loan payments, either by lowering your interest rate, extending the term of your loan, or both. All of these options save you money every month, but only a lower interest rate saves you money overall. If you simply extend the term of your loan without lowering your interest rate, you’ll end up paying more for your car in the long run.
Refinancing has no fixed costs, there are no associated costs as such. However, the process of refinancing your vehicle can come with costs at different times, depending on where you live and the lender you work with.
For example, some lenders may charge application or transaction fees. Additionally, some auto loans come with an early termination fee that applies when you cancel your loan early for any reason, including refinancing. And, depending on where you live, you may need to pay new registration fees or title transfer fees when title to your car is transferred to the new lien holder.
ACE advice: If you’re looking to lower your financing costs, be sure to do your homework before heading to a new lender. If there are ETFs associated with your loan, compare them to your estimated savings from refinancing to decide if it’s worth it.
Refinancing and bad credit
Like many things that go with traditional auto loans, refinancing generally requires a good credit score – around 670 or higher. However, if you originally took out a bad credit car loan, you may be able to refinance if your credit has improved since you took out your loan.
This usually takes a while, and most auto loans are not available for refinancing until at least a year from the original date of the loan. Refinancing can be a good opportunity for borrowers with poor credit to lower their rates, as they are generally eligible for auto loans with higher interest rates.
Having a better credit rating is just the start if you want to qualify for refinance. You also need to have a vehicle and loan amount that are within the range of the new lender, and you cannot have negative equity in the car.
Ready for refinancing?
If you’re ready to refinance your vehicle to save on your monthly car loan expenses, we want to help. We have the refinancing resources you are looking for. To get started today, simply request a refinance through one of our trusted refinancing partners.
If you need a new vehicle as well as a new car loan, we can help connect you with a dealership in your area that works with bad credit borrowers. AT Auto Express Credit, we have a nationwide network of special finance dealers who are registered with subprime lenders. Start your auto loan journey today by filling out our quick and free auto loan application form and we’ll connect you with a local dealership. Start now!