If you purchased your auto more than 1-2 years ago, you may well have signed yourself into an auto loan at too-high an interest rate (APR). The solution? Auto refinancing.

Most people have heard of refinancing a home – but refinancing a car? This is unheard of for most people. However, auto refinancing can actually be a very smart move. Refinancing can save you hundreds or even thousands in interest payments over the life of the loan.

What Are Auto Refinancing Loans?

Auto refinancing loans work in a way similar to the way that home mortgage refinancing works. You start the process by realizing that you have an existing loan that has monthly payments that are too high (or at least too much for you to afford). You then go through the refinancing steps and end up with a better loan at a lower interest rate, but you still own the same car.

You can save money in two ways through refinancing your car:

a. By getting a lower-interest rate loan than you have now

b. By spreading your car payments out over more time

Either of these ways – or both together – can result in significantly lower monthly payments.

How Your Credit Score Plays Into The Equation?

As with any type of loan you apply for through a bank or other financial institution, your lender will check your credit score as part of the process. For better or for worse, your credit score is the single most influential factor in the determination of the interest rate for your refinancing loan.

Have bad credit? Don’t worry – there are many car refinance lenders who specialize in working with bad-credit individuals.

Why Refinance Now?

How do you know when is a good time to refinance your auto loan? You should refinance if you believe that you could qualify for a better interest rate on your loan than you currently have with your existing loan.
There are two situations when this is likely: if you believe your credit score is better than it was at the time when you took out your existing loan, or if you have noticed that car loan interest rates on average are down since you took out your loan.

5 Steps To Getting The Best Deal On Auto Refinancing Loans

Here are 5 steps to getting the best deal on your refinancing loan:

1. Run your credit report and fix any glitches you find: Start by running your credit report with all three of the Big 3 credit agencies (including TransUnion, Experian and Equifax). Go over all line items on each report to make sure there are no falsely-reported items. If there are, immediately write each agency and have them take it off: they are legally obligated to do so if you can prove it is a mistake. This could bring your credit score up.

2. Do not approach your current lender for a refinance loan: Unlike with mortgage refinance loans, the majority of auto loan lenders do not offer refinancing loans for existing customers with auto loans.

3. Instead, make a list of at least 3 other lenders: Use the Internet to find at least 3-5 auto refinance lenders.

4. If you have bad credit, look for bad credit auto refinancing lenders: The ones who specialize in bad credit loans will make that clean on their websites.

5. Apply for a loan with each of the lenders – but do not accept the first offer you get: Now, be sure to apply to all of the lenders on your list. Remember, you will be tempted to stop after getting one or two offers, but it is well worth it to keep going until you have gotten the best-possible offer.

Follow these 5 steps to getting the best deal on your loan. You stand to save hundreds or thousands in interest while reducing your monthly payments.

Author Bio: Get a list of the auto refinancing lenders with the best deals near you at: Best Car Financing Deals.

Category: Finances
Keywords: Auto Refinancing Loans ,5 Steps To Getting The Best Deal on your auto loan