Refinancing an auto loan is an option you may have heard of, but what is involved with the process? At our Mazda financing center at Route 9 Mazda, our team aims to educate Poughkeepsie, NY, drivers on the ins and outs of refinancing an auto loan. This is what you need to know, including pros, cons, and how the refinancing process works.
What Is Refinancing, and Why Consider It?
Refinancing your auto loan simply means taking out a new loan to pay off your existing car loan. The new loan will have different terms, and the primary goal of refinancing is one of the following:
- Lowering your interest rate: This can save you money over the life of the loan if your credit score has improved or if market rates have dropped since you took out your original loan.
- Lowering your monthly payment: This can be achieved through a better rate or by extending the loan term to better fit your current budget.
What Are the Requirements for Refinancing?
Every lender is different, but they generally look for a few things when you apply for refinancing. In general, you have a better chance of getting approved if you have a history of on-time payments on your current auto loan. Lenders also take into consideration the vehicle’s age and mileage.
How Does Refinancing Affect Your Credit Score?
The refinancing process has a few effects on your credit. When you apply, lenders will make a hard inquiry, which can cause a small dip in your score. However, once you get approved and make on-time payments, this will cause your credit score to increase.
MAZDA Financing Tips at Route 9 MAZDA
At Route 9 Mazda, our finance professionals are happy to provide personalized tips on refinancing. Contact our team to discuss any of your financing questions today!
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