If you’re not entirely happy with your current car loan situation, it can be a great idea to consider refinancing! Refinancing essentially involves taking out a new loan to replace your existing one, and if you do it right, it can save you a lot of money in the long run.
1. Not Researching Your Options
There are a lot of different lenders out there offering car loan refinancing, so it’s important that you take the time to research your options and compare rates. Otherwise, you could end up paying more than you need to. You can easily compare your best car loan refinancing options online by using a car loan comparison broker website.
2. Failing to Read the Fine Print
No matter which lender you choose, be sure to read the fine print of your loan agreement carefully before signing anything. This way, you’ll know exactly what you’re getting into and won’t be surprised by any hidden fees or penalties.
You’ll normally have to pay a number of fees and charges to refinance (to both your existing lender and your new lender), so it’s important to factor these into your decision. These fees might include entry fees and early termination fees.
3. Not Getting Pre-Approved
Before you start shopping around for a new car loan, it’s a good idea to get pre-approved from a few different lenders. This will help you know what kind of terms and rates you can expect, and will make the refinancing process much simpler.
4. Closing Your Current Loan Before Refinancing
If you have an existing car loan that you want to refinance, it’s important to wait until that loan is paid off before applying for a new one. Otherwise, you’ll end up paying two loans at once and could end up costing yourself more money in the long run.
5. Paying Points to Lower Your Interest Rate
Although it might seem like a good idea to pay points in order to lower your interest rate, in most cases it’s not worth it. Instead, focus on finding a lender with a low-interest rate and no points.
6. Not Shopping Around for the Best Deal
Just like with any other big purchase, it’s important to shop around for the best deal when refinancing your car loan. By comparing rates and terms from a few different lenders, you’ll be sure to get the best deal possible.
7. Failing to negotiate
Just like with your original loan, it’s important to negotiate the terms of your refinance loan. Don’t be afraid to haggle with lenders in order to get a better rate or term.
So there you have it, our top 7 mistakes to avoid when it comes to shopping for car refinance options. Avoid these pitfalls and you’ll be well on your way to getting a great deal.