Quick Tips for Refinancing Your Car Loan

While many of us have heard of refinancing a home loan, not as many people may realize you can also refinance an auto loan to help lower monthly payments and save some cash.

Auto loan debt in the United States is the third-largest type of debt after home mortgages and student loans are accounted for. In total, Americans owe —- wait for it — $1.59 trillion in auto loan debt, according to the Federal Reserve Bank of New York.

Why Refinance an Auto Loan?

Some people refinance a car loan to extend the loan term as a way to get additional cash to pay down other debt such as high-interest credit cards. If you can secure a loan at a lower rate than you have now, you could see immediate savings moving forward.

How Much Can You Save?

While every situation is different, if you are paying more than you think you need to in interest, you could potentially keep more of your hard-earned money by finding a better (lower) rate. Research conducted shows that those who refinanced loans in the last few years saved an average of more than $1,100 over the life of the loan.

Another report on auto refinancing in the United States shows that one in five adults –19 percent – who refinanced a car loan had the monthly payment cut by $150 or more. And some 56% of borrowers saved between $50 and $149 on monthly loan payments, according to an analysis of more than 300,000 loans.

What Does That Mean For You?

To decide if refinancing could be right for you, take a look at your situation. If it has been a year or more since you received a vehicle loan – and If your credit score has improved since then – your chances of qualifying for a lower rate are likely better than before.

Visit our Auto Refi page to learn more about the refinance options available at Fortera.

Article distributed in partnership with SavvyMoney with reporting by Casandra Andrews and Jean Chatzky