If you're currently making payments on a car loan, you may have the option to refinance and enter into a new loan agreement. Refinancing certainly has its advantages, and a lender may advise you to refinance if you meet certain criteria. Auto loan refinancing may come with the following benefits.
Saves Money
The new loan terms that you'll agree to if you refinance may offer you price breaks on your monthly premiums. Some auto loan refinance options come with lower interest rates, and signing up for one of these loans can lower the amount that you'll need to pay to the lender for simply loaning you the money.
Possibly Earns You Money
A cash-out refinance loan can earn you some extra cash if you need money to pay for other auto-related expenses or for other things in life. With this type of loan, you can borrow more money than your vehicle is worth and take the difference as a cash payment that you'll repay later with the rest of the loan amount.
Shortens or Lengthens the Repayment Period
If you want to pay off your vehicle quicker so that you can take full ownership of it sooner, a new refinance loan may come with a shorter repayment period. You can also choose to extend the repayment period when you refinance if you need more time to pay off the vehicle.
Gives You the Power to Add or Omit a Cosigner
If you want to add a cosigner to the loan to give the lender extra assurance that the loan will still be repaid if you run into financial hardship, you can add a cosigner to the refinance loan and also possibly get a lower interest rate. You may also remove a cosigner if you no longer want someone to have any part in the financial agreement between you and the lender.
Helps Boost Your Credit Score
Refinancing can make your monthly premiums more manageable, which means that you'll be less likely to default on your loan payments and damage your credit. You may increase your credit score even further if you get a loan with a shorter repayment period and can pay off the loan faster.
Offers You the Chance to Switch Lenders
Not all lenders are the same, and you may be more satisfied doing business with another auto lender. Refinancing offers you the perfect opportunity to change lenders and enter into a new agreement that may come with better terms and lower interest rates.
Refinancing could make paying off your auto loan easier. Talk to a professional to learn more about how the auto loan refinance process works.