Every month, that car payment takes a noticeable chunk out of your checking account. Right now, the typical payment for a new vehicle tops $600 per month, while used-car payments average around $400 monthly.
What if you could shave roughly $150 off your monthly payment? Would investing a few minutes be worth that savings?
You should give serious thought to refinancing your auto loan. That means replacing your current loan with a new one that carries a lower interest rate, putting more money back in your pocket. Why keep paying the bank more than necessary?
Take a look at this convenient auto-loan marketplace run by a company called ReFiJet. It helps you refinance your car loan — and as an added perk, you won’t owe the first two months’ payments. It can cut your monthly outlay and potentially save you thousands over the life of your loan.
Refinancing might not have crossed your mind, but it’s gaining traction as consumers become more financially astute. Your auto loan is likely your second-largest liability after your mortgage.
At the moment, auto refinance rates are at multi-year lows, with rates beginning as low as 2.49% APR. Perhaps when you took out your current loan, rates were higher or your credit profile wasn’t as strong as it is today.
It costs nothing to explore whether you have better alternatives. ReFiJet won’t perform a hard credit inquiry just to show you potential offers, so checking your options won’t damage your credit score.
Plus, applicants with fair or poor credit might still qualify. ReFiJet claims it can assist nearly anyone who still owes money on a vehicle.
Here’s how to refinance a car:
See How Much You Could Save
It’s as simple as starting your car. Visit the site and enter some basic details — your name, date of birth, contact information, and so on.
ReFiJet will display multiple auto-loan options you’re pre-qualified for, along with estimated rates and monthly payments. You can instantly see the potential savings. This preview is performed with a soft credit check that won’t affect your credit score. A hard credit inquiry might occur only if you formally apply for a new loan.
A hard pull can temporarily lower your credit score a bit, but your score typically recovers if you continue making timely payments.
The presented offers (and their interest rates) remain valid for 30 days. If you choose to accept an offer, you can opt to work with a financial services representative by phone if you’d like personalized assistance.
ReFiJet reports that customers save an average of $150 per month — a sum that really adds up over years of monthly payments.
Reasons to Refinance
Should you swap your current loan for a new one? It depends on your circumstances. Refinancing is a smart move if any of the following apply to you:
Your Credit Score Has Improved
Your credit score is the primary factor lenders use when deciding whether to extend credit and at what interest rate.
Scores fluctuate for many reasons, and the most significant indicator is whether you’ve been paying your bills on time.
If you obtained your auto loan when your credit score was lower, a higher score now could qualify you for a better loan with a lower rate, reducing your overall cost.
That said, ReFiJet maintains it can assist applicants with fair or poor credit, too.
There are multiple ways to check your credit score for free, and obtaining your credit report is fairly straightforward.
Interest Rates Have Fallen
If you financed your vehicle when rates were higher, refinancing now could deliver substantial savings.
Interest rates are historically low at the moment, making borrowing cheaper than it has been in a long time.
In short, it’s an especially affordable time to refinance.
You Didn’t Shop Around Initially
Chances are you took the loan offered by the dealership when you bought your vehicle — many buyers do that for convenience.
The catch is that dealership financing might not have been the most competitive option. What’s the downside of checking other lenders to see if you can do better?
Your Payments Are Too High
If your monthly payment is straining your budget, refinancing can offer relief.
You have several choices. Securing a lower interest rate can reduce your monthly payment, although that might not be enough alone.
Alternatively, you can lengthen the loan term, which spreads payments over a longer period.
There are pros and cons: extending the term lowers your monthly obligation but increases the time it takes to pay off the loan and the total interest paid over the loan’s life.
Reasons Not to Refinance
While there are solid reasons to consider refinancing, it isn’t the right move for every vehicle owner. Depending on your situation, refinancing might not make sense. Consider these reasons to hold off:
You’re Behind on Payments
Loan payments can be burdensome. If you’ve fallen behind, you may have trouble qualifying for a new auto loan, and it’s unlikely you’ll qualify for a better rate.
If refinancing is your goal, get current on your existing loan first.
You Owe More Than the Car Is Worth
Auto loans are secured loans with your vehicle serving as collateral. That means the lender can repossess the car if you stop making payments.
If you owe more on your loan than the vehicle’s market value, obtaining a new loan could be difficult.
Your Car Is Older or a Classic
Many lenders avoid financing older, classic, or exotic cars because it’s harder to determine their true market value.
ReFiJet notes it’s not overly concerned with mileage, but it will not refinance vehicles more than 10 years old.
So a 2011 Ford Ranger, Hyundai Sonata, or Volkswagen Jetta likely won’t qualify.
Your Loan Has a Prepayment Penalty
Some lenders impose prepayment penalties when you pay off a loan early. Check your current loan terms or ask your lender whether such a fee applies.
These fees compensate lenders for interest income they’d lose when a loan is paid off ahead of schedule.
If a prepayment penalty applies, it could negate any savings from refinancing.
Cash-Out Refinance Loans
Homeowners sometimes use cash-out refinancing on mortgages, and similarly, car owners can tap equity in their vehicle when refinancing.
This means replacing your current loan with a new one and borrowing extra cash against the vehicle’s equity if the car’s value exceeds what you owe.
ReFiJet offers cash-out refinance options for borrowers who want them.
Be cautious: even if you secure a lower rate, increasing the loan balance raises the amount you owe, and you could end up owing more than the car is worth.
Final Thoughts
Your auto loan shouldn’t be a burden. You deserve a loan with a better rate and lower monthly payments. Don’t let that monthly bill weigh you down.
Keep in mind that ReFiJet charges a loan origination fee of $395, but it’s rolled into the new loan, so it’s not an out-of-pocket expense up front. Its competitors typically charge higher fees.
Think about it: you already own the car and continue paying for it while driving it every day.
Wouldn’t you rather pay less to the bank? It costs nothing to see if you have better choices.
Alex Mercer ([email protected]) is a senior writer at Savinly.
