A Guide to Auto Refinancing

by Julia Guardione Updated on: August 21, 2019

The majority of car buyers don’t like the interest rate they got when they bought their car.

That less than stellar interest rate you received could be the result of a low credit score or maybe interest rates were just higher than they are now. If you’ve improved your credit score or interest rates have fallen since you took out the car loan, refinancing could save you some big money over the long haul.

Many people associate financial changes with stress, especially when it comes to refinancing a loan. Some expect the process to be a hassle, some stress because they don’t know what to expect, and, more rarely, some feel perfectly comfortable. Regardless of which category you identify with, we created a guide that should provide you with helpful knowledge to keep you informed about what to expect, make the process as simple as possible, and, of course, to help save you money.

1. Do it sooner than later.

Because interest accrues every day, and since your vehicle becomes less valuable with every mile, the longer you wait, the higher loan-to-value (LTV) ratio you’ll have. LTV is an important factor for lenders when deciding to make you an offer.

2. Expect to have paperwork.

No matter whether refinancing with rateGenius or another company, paperwork is a tedious, yet necessary, part of the process. Refinancing requires the coordination and cooperation between different lenders and bureaucracies across the United States, which can sometimes require extra documentation and a bit of patience. Luckily, we do our best to alleviate as much stress as we can by handling the rest of the process.

3. The process is typically quick, but sometimes it can be tricky.

This is the case especially for lease buyouts and for transfers of ownership.

4. Apply with accurate information.

This is one of the most important things to keep in mind, as it can determine the ease of your refinance process. Lenders base their decision and offer on the information provided in customers’ applications. Sometimes, however, once customers complete and submit the documents for their accepted offer, the information does not match their application. This can result in rescinded offers, therefore requiring new approval (or not), and new documentation to coincide with that approval. This significantly delays the process, and will likely result in a different rate than you originally agreed to. Always make sure that what you enter into your application is correct; that the name you enter matches your driver’s license, and that you list your income and vehicle’s mileage with 100% accuracy.

5. Do your own math.

This is a general rule of thumb for all things financial. Though we provide accurate and in-depth explanations of loan terms to our customers, it always feels reassuring to do the math yourself to make sure you understand and agree to the terms.

6. Keep making payments.

If you have any payments due during the interim between your old loan and your new loan, still make the payment. If there are any funds left on your old loan after your new lender pays it off, your old lender is legally obligated to return that money to you.

7. Credit is a factor, but not the only factor.

Many customers believe that if they have great credit, that they’ll be automatically approved for a new auto loan. However, that’s not necessarily true. Though credit is an important consideration, lenders mostly care about things like DTI (debt-to-income ratio) and LTV (loan-to-value ratio). DTI is essentially the lender’s assessment of risk in your ability to afford the auto loan payments. LTV is your lender’s determination about how much you owe on your previous loan versus how much your car is worth. Put another way, it indicates your proximity to being upside down on your loan.

8. Select automatic payments.

Many lenders offer perks for customers who select automatic payments on their new loans. Some perks include lower auto loan rates, which can save some people hundreds of dollars over the life of their loan.

About The Author


Julia Guardione

Julia is the resident content creator at RateGenius. She is a graduate of Texas State University and a lover of all things outdoors. She lives in Austin, Texas with her dog and cat. She’s always open to new ideas, so if you have any suggestions or questions, email her at pr@rategenius.com.


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