Anonymous
By Alex West
A lot of people think that refinancing a car loan is only something you do if you’re in financial trouble. But that’s not necessarily true! In fact, there are a number of reasons why you might want to refinance your auto loan – even if you’re not struggling to make your monthly payments. Keep reading to learn more about when refinancing your car loan makes sense.
When Interest Rates Drop
If you financed your car when interest rates were relatively high, it might make sense to refinance your car loan now that rates have gone down. By securing a lower interest rate, you could save yourself money every month on your car payment – and over the life of the loan, those savings could really add up! Just be sure to shop around for the best deal before you commit to anything.
When You Have Improved Your Credit Score
Your credit score is one of the biggest factors lenders consider when determining whether or not to approve your loan – and what interest rate to offer you. So, if your credit score has gone up since you originally financed your car, refinancing now could get you a lower interest rate and monthly payment
When You Want to Shorten The Length of Your Loan Term
If you’re looking to become debt-free sooner rather than later, refinancing into a shorter-term loan could be a good option for you. Of course, this will likely mean higher monthly payments – but it’s worth it if being debt-free is important to you! And, once again, a higher credit score can help you qualify for a shorter-term loan with more favorable terms.
How to Refinance Your Auto Loan
Refinancing your auto loan could be a great way to free up some extra cash and lower your monthly car payment—and it’s not as complicated as you might think. Here’s what you need to know about how to refinance an auto loan.
Shop around for a new loan
Start by talking to your current lender to see if they’re willing to offer you a better deal. If not, there are plenty of other lenders in Santa Barbara who may be willing to work with you.
Apply for the loan
Once you’ve found a lender with terms that you’re happy with, it’s time to apply for the loan. The process is similar to applying for your original auto loan—you’ll need to submit information about your income, employment, and credit history.
Get approved for the loan
Once you’re approved for the loan, the next step is to use the money from the loan to pay off your existing auto loan. This may seem like a complicated process, but your lender will be able to walk you through it step-by-step. And once it’s all done, you’ll be left with a new, lower monthly payment—and maybe even some extra cash in your pocket.
Are There Downsides to Refinancing Your Auto Loan?
You could end up paying more in interest overall
Even though refinancing at a lower interest rate can lower your monthly payments, it’s important to remember that it will also extend the term of your loan. This means that even though your monthly payment may be lower, you could end up paying more in interest over the life of the loan than if you had kept your original loan.
You could end up owing more than your car is worth
If you’re considering cash-out refinancing, it’s important to be aware that if you choose to refinance for more than what your car is currently worth—also known as being “upside down” or “underwater”—you’ll owe more than the car is worth and would be responsible for paying that difference if you were to total the vehicle or sell it before the loan is paid off.
There could be fees involved
In some cases, there may be fees associated with refinancing an auto loan like application fees, origination fees, or prepayment penalties if you pay off the loan early . These fees can add up quickly, so be sure to factor them into your decision before moving forward with any type of refinance.
How to Choose the Best Lender for an Auto Refinance
Deciding to refinance your car loan is a big decision. It can save you money each month, or it could end up costing you more in the long run. Either way, it’s important to choose the right auto refinance company. Here are a few things to keep in mind when choosing a company to refinance your loan:
Make sure the company is reputable
There are a lot of scams out there, and you don’t want to be taken advantage of. Check out online reviews and compare rates before you start working with a company.
Make sure you understand all the fees involved
Some companies charge origination fees or prepayment penalties, so it’s important to ask about these before you agree to anything.
Make the time to compare rates from multiple companies
Just because one company offers a low rate doesn’t mean they’re the best option for you. Compare offers and make sure you’re getting the best deal before you sign on the dotted line.
The Best Auto Lenders in Santa Barbara
Santa Barbara is a beautiful coastal city in Southern California, known for its stunning beaches, Mediterranean climate, and quaint Spanish architecture. It’s no wonder that this lively city is also home to some of the best auto lenders in the state. If you’re in the market for a new car loan, here are four of the best lenders in Santa Barbara.
First Bank of Santa Barbara
This credit union offers low interest rates and flexible terms on new and used car loans. They also have a team of friendly and helpful representatives who are always happy to answer your questions.
Wescom on Central Credit Union
As a community-focused credit union, Wescom offers a variety of financial services to its members, including checking and savings accounts, loans, and investment products. In addition, Wescom provides free financial education resources to help its members make informed decisions about their finances.
Ojai Community Bank
They have a long-standing commitment to the communities they serve, and they offer programs and services that are designed to meet the unique needs of their customers. In addition to traditional products like checking and savings accounts, community banks also offer loans, credit cards, and investment products. They also provide a full range of online and mobile banking services.
LightStream
If you’re looking for an online lender, LightStream is a great option. They offer low interest rates and fast approvals on new and used car loans. Plus, they have a great customer service team that is always available to help.
Refinancing your auto loan can be a fantastic financial move when you do your due diligence and do it at the right time, with the right terms, and through the right lender.
No matter which lender you choose to refinance your auto loan, be sure to shop around for the best interest rate and terms before committing to a loan. And remember, auto loans are a big financial responsibility, so make sure you can afford the monthly payments before signing on the dotted line.
