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  • Mar 16, 2022

A Quick Overview of Refinancing Auto Loans in 2022

Refinancing your vehicle in the new year may save you money on your auto loan. Here is our quick overview of refinancing auto loans in 2022.

When you purchased your vehicle, there’s a chance you obtained an auto loan to pay for it. However, with the new year, you may be able to readjust your loan to decrease your interest rate. Here’s a quick overview of refinancing auto loans in 2022 so that you can start saving money.

How Does Refinancing Work?

Refinancing auto loans in 2022 works through replacing your current auto loan with a new one. The new loan will pay off the original one. Refinancing doesn’t take much time, as lenders can typically make quick decisions.

How To Refinance Your Auto Loan

Before jumping into refinancing your auto loan, decide whether or not it’s the right decision for you. There are two reasons for refinancing: getting a better interest rate or if you struggle to meet monthly vehicle payments.

Review Your Current Loan and Credit Score

The overall review of your payments comes down to understanding precisely how much you pay in interest, your monthly payments, and the total cost of the loan once you have completed its entire term. Pay attention to your current interest rate first. If your credit score has improved, lenders will view you as lower risk and possibly offer you a better rate. Making smart money decisions such as paying off credit card debt on time will result in a better credit score, thus improving your chances of getting approved for a better rate.

Estimate Your Car Value and Compare Rates

Knowing your vehicle’s value will help you get a reasonable refinancing rate. If your vehicle has lower mileage and an acceptable balance to pay off, you’ll fit as a refinancing candidate. If its value is less than what you owe, refinancing might not work. Lastly, refinancing isn’t the best idea if your vehicle is almost paid off.

Also, an important note is to compare different interest rates. Lenders will consider your financial history, credit score, and eligibility, so check rates through your financial institution before making the jump.

Get Paperwork in Order

Once you’ve done the math ahead of time and determined how much you could save, gather the necessary documentation before applying. Gather your W2s, utility bills, insurance cards, and pay stubs. Additionally, have your vehicle’s make, model, VIN, and mileage prepared.

Whether you plan to buy a new car or a new home, getting qualified for a loan shouldn’t be a struggle. If you’re looking for an auto loan for your dream car or need a credit union mortgage loan for your home, GFA Federal Credit Union has you covered. Every person’s needs are different, so reach out to us today if you need a quote or have general questions.

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