Decide if refinancing is best for you financially.Follow these five steps before signing off on a new refinanced auto loan. The process of refinancing your auto loan is similar to applying for your initial vehicle loan. If you fall into this category you might get offered lower rates. Lenders see positive equity, when your vehicle is worth more than you owe, as a plus. However, the Fed has passed on raising rates for three straight meetings, and observers expect rate decreases in 2024. This is unfortunately not the case right now as the Federal Reserve has increased rates at 11 meetings since the beginning of 2022, meaning a higher cost for lenders to borrow. When the federal funds rate is low, auto loan rates will also be more competitive. Ideally, you should lower your payment by sticking with a term similar to the time you have left at a lower interest rate. However, it will increase the amount of interest you pay. Refinancing for a longer loan term can reduce your monthly payment. If your score has improved since your original auto loan, you may save money by refinancing. A difference of just 30 points on your credit score can make a significant impact on your rate. If your original loan was financed by your car dealer’s preferred lenders, there is a good chance you didn’t score the best rate possible. Dealers often add a few points as a commission. Wondering when you should refinance your current auto loan? If you're in one of these situations, the answer might be now. To avoid this, stay away from long repayment terms - which can feel enticing when refinancing for a smaller monthly payment. If you choose to refinance at a similar rate but opt for a longer term, you are more likely to become upside-down. The choice to refinance does not come without risk, however. Current loan meets the minimum refinance amount.Lenders may require you to meet specific requirements to refinance, including:

While many can qualify for better rates through refinancing, it’s not always the case. If you can qualify for lower rates and opt for a shorter - or equivalent - term, you may reduce your monthly payment and the total amount of interest you pay. Refinancing allows you to replace your current loan with a new one.

This way, you can calculate if refinancing will really save you money compared to your current loan.

Get preapproved with multiple lenders to see potential rates - and determine if they meet your needs. After figuring out what adjusted term and interest rate work best for you and your wallet, compare lenders that offer auto refinance. Simply enter the details of your current loan: your monthly payment, remaining balance, interest rate and the remaining loan term. Use the auto loan refinance calculator to find potential savingsīankrate’s auto refinance calculator can help you determine how much you could save on interest, monthly payments or both.

Refinance car loan calculator