When Is A Good Time To Refinance An Auto Loan?
When Is A Good Time To Refinance An Auto Loan?
Most consumers are familiar with refinancing a mortgage loan as a way to reduce their rate and monthly payment. However, not as many are familiar with the process of refinancing an auto loan, know what to expect, or when to consider refinancing this type of loan.
While everyone’s financial situation is different, typically the best times to refinance are when:
- Current interest rates are lower than your existing auto loan
- Your credit score has improved from when you originally took out your loan (meaning you likely to a lower rate)
- You are looking to save money or lower your monthly payment
Benefits of Refinancing Your Auto Loan
Refinancing your auto loan can be a great financial decision. Not only can it lower your monthly payment but it can also benefit you if you are interested in:
- Paying off your loan faster, but not interested in paying more each month
- Reducing the interest paid over the life of the loan
- Adjusting the term length of your loan, either shorter or longer
- Looking to switch your auto loan to a new lender who offers better customer service
Use the chart below for a quick comparison.
| Lender | Rate | Monthly Payment | Total Interest | Savings Over the Life of Loan |
|---|---|---|---|---|
| TEG | 6.99% APR* | $479 | $2,989 | |
| Other Lender | 7.99% APR | $488 | $3,432 | $443 |
| Other Lender | 8.99% APR | $498 | $3,885 | $896 |
| Other Lender | 9.99% APR | $507 | $4,350 | $1,361 |
| Other Lender | 10.99% APR | $517 | $4,813 | $1,824 |
*APR = Annual Percentage Rate. Rates effective as of 4/1/2024. Advertised rate is "as low as" and includes a .25% rate discount for automatic payments. Rate is based on credit rating, term, vehicle model year, and mileage. Your rate may vary. Other rates and terms available. Rates subject to change. All loans are subject to approval. Internal refinances and auto equity loan rates are different and are not eligible for promotional rates. For example, refinancing a 2021 car at 48 monthly payments of $23.95 per $1,000 borrowed at 6.99% on a 2024 model. This monthly payment is based on non-discounted rate and includes optional single TEG Payment Assurance.
Save More By Ask About Additional Incentives Or Payment Discounts
When considering an auto refinance ask your lender if there are incentives or discounts that may lower your payment even further.
For example, many lenders, including TEG, offer borrowers an additional .25% interest rate reduction just by setting up recurring automatic payments.
That’s a simple and effective way to put even more money back in your pocket.
What To Expect With An Auto Loan Refinance
Refinancing your auto loan isn’t complicated or time consuming. Most applications can be completed online in less than 15 minutes and lending decisions are often made within the 1-2 business days.
To streamline the application process, gather the details of your vehicle and current loan before you begin. Details such as the amount you owe, name and address of the current lender, make, model and year of the car and estimated mileage. Like most loan applications, the lender will ask for some basic personal information including your social security number and income.
Once your loan is approved you can likely sign all loan paperwork online. You may be asked to review the terms and conditions of the loan with a lending officer, but in most cases this can be done over the phone and only takes a few minutes.
After loan documents are signed, your new lender will pay off your higher-rate loan and provide instructions on how to make your new, lower, monthly payment.
For most borrowers, from start to finish, the entire auto loan refinance process can be completed in less than a week.
If you are thinking about refinancing your auto loan read more about auto loan refinancing through TEG or get in touch to ask a question.