refinance auto loanRefinancing your car loan can often lower your monthly payments.

Auto loan interest rates are hovering at the lowest rates seen in many years. If you are currently paying a high rate, you may be able to benefit by refinancing at a lower rate.

Depending on the value of your car and the amount you owe on your loan, you might even be able to refinance and get cash back out of the deal.

Refinancing an auto loan is similar to getting any other used-car loan. You might refinance with the same company with which you have your current loan, or you might go to a different bank or loan company.

If you bought your car new and financed your loan through the car manufacturer’s “captive” finance company, you might find that the company does not do refinance loans. In this case, you’ll have to go to a bank or loan company for your loan.

Loan rates vary between different banks and finance companies. Refinance rates are usually higher than new-car rates, but lower than ordinary used-car rates. Shop around for the best rates.

Of course, your credit score will affect the rates you are offered. It’s always a good idea to know your latest credit score before you start shopping for loans. You can get your score online from services such as Experian where you only need to fill out a simple form that will allow you see your score instantly. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!

If your credit score has improved dramatically since you initially borrowed, a low-interest refinance loan could significantly reduce your monthly payment and remaining loan cost.

Your ability to refinance will also depend on the value of your car and the amount of the balance on your current loan. If you still owe more than your car is worth, you are “upside down” and you may not be able to refinance for the full amount you need.

You might also find that you can’t refinance if you are too near the beginning or end of your loan, or if your car is more than about 5 years old.

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