Refinancing an auto loan
Similar to refinancing a mortgage on your home, refinancing an auto loan may enable you to save money. Since the purchase of an automobile is often a one-day transaction, the buyer is less inclined to take the time and effort to shop for loan rates before or during the transaction. As a result, the interest rate on the auto loan you secured, while competitive, may not have been the lowest available to you then and may be higher than what is available now.
If you purchased and financed an automobile recently (in the last 12 months for example), there is a reasonable chance that auto loan refinancing will save you money. That is, as long as interest rates haven't risen notably and your FICO
® Score hasn't dropped significantly.
Understand that there are fees involved in an auto refinance, just as in a mortgage refinance, so you need to carefully look at all associated costs and terms. You also need to determine if your current auto loan has pre-payment penalties, as that can change the viability of auto loan refinancing.
Read a myFICO blog post to learn more about considerations regarding refinancing an auto loan
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