Auto refinancing is a great way to save money on your car loan. But auto refinance rates don’t last forever, and there are times when refinancing makes sense and doesn’t. So if you have mixed feelings about whether or not to refinance your auto loan at the moment, then this article will help you decide whether it’s time for an upgrade!
If you want a lower monthly payment
Auto refinancing is a great option if you want to pay off your loan more quickly. By refinancing and taking out a shorter-term loan with a lower interest rate, you can save money on interest payments since the monthly payment will be less than it was before. This will allow you to repay the loan sooner and have more money available for other things. Use the auto refinance calculator for this.
If your credit score has improved
If you’ve improved your credit score and have a more stable income, then refinancing to a lower rate (which often also comes with a longer loan term) is likely to save you money. Your monthly payments will go down and your loan balance will go down as well.
Your credit score could be a little higher than it was when the original auto loan was taken out, or it could be significantly higher—it all depends on how long ago the original auto loan was taken out. If the latter is true, then refinancing can save you even more money!
If you cannot make the minimum monthly payment on your current loan
If you cannot make the minimum monthly payment on your current loan, then it may be time for you to consider refinancing. When this happens, the lender must notify you in writing of their intention to repossess your car. The letter will tell you how much money they want and what date they expect payment by. If this date passes without any payments being made, then they have the right to take back possession of your vehicle.
There are also several negative consequences associated with missing a single payment:
- You will be charged a late fee
- You will be charged interest on the late amount (this can add up quickly!)
- You may have to pay a higher interest rate
If you have an adjustable rate mortgage (ARM) and want a fixed-rate mortgage
You can save money by refinancing if you have an adjustable-rate mortgage (ARM) and want a fixed-rate mortgage. Refinancing makes sense if your current ARM has a higher interest rate than what is available through the new loan.
In addition, if your home value has increased since you bought it, that would also make refinancing worthwhile. A lower interest rate means lower monthly payments and a lower balance overall due to paying off the loan faster with a reduced principal.
“Start comparing the auto loan refinance options now on Lantern by SoFi and see how much you can potentially save.”
Auto refinancing is a great way to save money and maintain your credit score. As long as you have been making on-time payments on your current loan, refinancing can be a smart option for many people. However, it’s important to take your time with everything! Before making any decisions about refinancing, take some time and research what works best for your situation.