Can I Refinance My Car Loan?
When you purchased your car, you were most likely feeling tremendous excitement. After all, who doesn’t like upgrading to a newer vehicle? However, this excitement often makes it hard for you to consider the long-term financial impact this purchase will have on your monthly finances. Cars are becoming more expensive every year, and it’s rare to be able to afford one without taking out a car loan. Unfortunately, many people soon find that their car loan is a financial albatross.
According to a 2021 Experian report focused on Q3 automotive financing:
- The average new car loan amount was $37,280
- The average new car payment was $606 per month
- The average new car loan term was approximately 70 months (almost 6 years)
Keep in mind that these are averages. Many individuals are paying well over $600 a month and have loan terms that extend even longer – upwards of 7 years! For many people, these long-term payments can be crippling.
So what are your options if you find yourself drowning from a monthly car payment that you simply can’t afford? One of the best solutions is often to refinance your car loan. Refinancing your car loan is a process where you replace your existing loan with a new one. This new loan will pay off your original one, and you’ll start making a new set of payments based on the terms of the new loan.
Benefits of Refinancing a Car Loan
There are a variety of financial benefits you can achieve when you refinance your car loan:
- Lower your interest rate – Often, you can receive a more favorable interest rate when you refinance. This may be due to improvements in your credit score since you bought the car, a decrease in market interest rates since your initial loan, or both.
- Lower your monthly payment – If you’re able to lower your interest rate, you’ll be able to lower your monthly payment while keeping the same repayment term. If you need to add even more money back into your monthly budget, you can choose a longer repayment term for your new loan. Just keep in mind that you may pay more money in interest over the life of the loan with a longer repayment term, but this may be worthwhile if you’re struggling to pay all of your monthly expenses at the moment.
- Pay off debt sooner – You can choose a shorter repayment term with your new loan, allowing you to pay off your vehicle faster. Keep in mind that you won’t experience as much in monthly savings if you choose a shorter loan term.
- Skip a payment or two – Often, you’re able to skip one to two monthly payments when you refinance before the new loan kicks in. This gives you an opportunity to use that money to pay off other debt, make a purchase for your home, or allocate that money to any other need you may have.
You can use our savings calculator to see how much you can expect to save when you refinance your car loan with iLending.
When Should I Consider Refinancing My Car Loan?
- Your credit score has improved – Your credit score is one of the most important factors impacting the interest rate you’re offered on a car loan. If your credit score has improved since you took out your original loan, it’s likely that you’ll qualify for a lower interest rate now, even if the market interest rates haven’t changed much. Often, making regular payments on a car loan will boost your credit score over an extended period of time so there’s a good chance your score has improved since you purchased the car.
- You need a more affordable monthly payment – Even if you’re unable to lower your interest rate, you can still lower your monthly payments by choosing a longer repayment period when you refinance your car loan. While this may result in paying more interest over the lifetime of the loan, it may be a worthwhile tradeoff if a lower monthly payment will help you to pay your bills.
- You didn’t get a good rate on your original loan – There are many reasons why your current car loan may not have provided you with great terms. If you financed through a dealer, it’s possible that they simply didn’t offer you the best interest rate possible (this is very common). Similarly, if you didn’t shop around and compare loan options the first time around, you may have ended up with a higher interest rate as a result. Refinancing your car loan gives you an opportunity to hit the reset button with more favorable terms.
iLending Makes Car Loan Refinancing Easy
If you’ve been saddled with an onerous car loan, you have options. At iLending, we can help you save a significant amount of money by refinancing your car loan. Our clients save an average of $145 a month after refinancing with us, freeing up important funds to allocate towards other areas of need. Read our savings stories to find out how others have been empowered after refinancing their car loan.
iLending is the only nationwide auto refinancing company providing a You First Approach™ to make car loan refinancing easy and hassle free. You’ll work with a loan consultant who will be your single point of contact during every phase of the process. Your loan consultant will take the time to get to know you and understand your specific goals. This ensures we’re able to target the specific loan options that best meet your needs.
Your loan consultant will then compare loan options from our vast network of local and national lenders for you. We’ll review your options with you in detail and guide you every step of the way to help you make the right decision. Our team will complete all paperwork for you, making the process as easy as possible.
Unlock the financial freedom that is possible when you get out of a burdensome car loan. iLending will handle everything for you to ensure your car loan refinancing experience is as easy as possible, and we’ll make sure your new loan truly meets your needs.
Apply now to start the refinancing process.
What would you do with an extra $132* in your pocket?
