When you purchase a car, the easiest way to get a loan to buy it is by applying at the dealership. This offers a fast and convenient way to get a loan and take the car home with you the same day. The downside to this is that you might not end up with the best interest rate on the car. After making your purchase, you do have the option to refinance the car loan if you would like to get a lower interest rate. If you decide to do this, there are three factors that could affect the rate you qualify for.
Your credit plays the biggest role in the interest rate you qualify for when buying or refinancing a car. If you have bad credit, you may not be able to find a lender that will give you a lower rate. On the other hand, if you have great credit, you might be able to find a lot of lenders that would offer you a loan for a lower interest rate. Examining your credit score should be the first thing you do so you know what your options are.
The second factor that can affect the rate you get is the age of the car you just purchased. Lenders that offer auto loans are almost always willing to offer lower rates on newer cars. Lenders assume more risks when they offer loans on older cars, and this is why you may notice that the interest rates on older cars are always higher than the rates on newer cars.
If you want a better interest rate, you may want to think about this factor. If the car you purchased is relatively new and if you have great credit, there is a good chance you will find a loan with a better interest rate.
Length Of Loan
The third factor in this decision involves the length of the loan. If your credit is good and your car is new, one way you might be able to get an even better interest rate is by shortening the term of your loan. If you currently have a 60-month loan, look into getting a 48-month loan. Lenders generally offer lower interest rates on shorter-term car loans.
Refinancing a car loan to get a lower interest rate could help lower your payments, and it will help you save money on the total amount you will end up paying for this car. To learn more, contact a lender that offers auto loan refinancing.