Q:

How do you refinance a car?

A:

Quick Answer

Approach a lender that offers refinancing loans for automobiles, and complete its application, as Chase explains. If you already have an account at a bank that offers this type of financing, consider applying there because many banks offer rate discounts to their account holders.

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Full Answer

Provide information about your current income, employment history and other information about your finances when prompted by the lender. Interest rates have dropped as of 2015, and if your current loan has a rate at or above 6 percent and you have excellent credit, consider refinancing, as Bankrate recommends.

Refinancing doesn't always make sense for every situation. Even if interest rates in general haven't changed, you might still consider refinancing if your credit score has improved significantly. Interest rates as high as 18 percent are common for people with poor credit or limited credit history. If your score has increased significantly, Bankrate advises that refinancing could allow you to secure significant future savings.

Additionally, refinancing can also help you avoid falling behind financially if you need to reduce your payment amount by extending the term. Even if your interest rate increases, you don't want a repossession on your credit report. This type of issue makes it difficult to gain approval for any sort of financing in the future, according to Bankrate.

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