Refinancing your car loan may save you money if you can negotiate a lower interest rate and better terms than you currently have. To determine if it’s the right decision, you can run some numbers. Interest rates, APRs, origination fees, and even the expense to re-register your vehicle are all costs to consider.

Interested in learning more? Ask yourself some important questions:

1. What’s Your Car’s Value?

Check the current value of your car through Kelley Blue Book to help determine your car’s equity. While lenders may allow for a refinance even if you owe more than the car is worth, you’re more likely to get favorable terms when you have equity remaining.

2. How Many Miles Do You Have?

Some lenders are unlikely to refinance your car if it is older than 10 years or has more than 100,000 miles on it. Just as lenders may not want to take on an auto loan with upside-down value—where you owe more than your car is worth—they may feel the same about older vehicles.

3. How Many Auto Loan Payments Have You Made?

Some lenders will not offer refinancing if you haven’t already made at least six payments on your current loan. They may also decline your application if you owe less than $5000 or have fewer than 24 months of payments remaining.

4. How Do Your Current Auto Loan Terms Compare to a Refinance?

It is important to compare your current rate and terms to other offers. When you find the best rate for you, calculate how much you will save each month by refinancing and over the full term of the loan. You can use an auto loan refinance calculator that will project your new monthly payment based on the interest rate and how much you still owe on the loan.

5. What Other Auto Refinance Costs Could There Be?

Ask each lender you consider if they charge origination fees, and what those fees are. Some might also charge a prepayment penalty if you pay off your loan early, which might eat into any savings you might have obtained from refinancing. Your current lender may also charge a fee for terminating the car loan you have in place now. Some states’ Department of Motor Vehicles will also charge registration and title transfer fees after you refinance.

6. Do You Need to Prequalify for an Auto Refinance Loan?

Because lenders may offer different rates and terms, it is important to compare offers. Prequalification may allow you to see offers based on your finances without a hard credit inquiry. Different from a pre-approval, prequalification only involves a “soft” credit check that won’t impact your credit score, which permits the lender to give you an idea of the interest rate they can offer you.

7. How do You Apply to Refinance Your Car?

If you decide to refinance, the process will likely be similar to when you applied for your original loan, and you may need to submit:

• Proof of income from a pay stub or tax return
• Proof of residence from a lease or mortgage statement
• A valid, government-issued photo ID
• The make, model, year, mileage, and vehicle identification number of your car
• The current monthly payment of your loan and payoff amount
• Social Security Number
• Proof of car insurance and registration

The lender will obtain your most recent credit report and calculate your debt-to-income ratio (“DTI”). Most lenders seek a DTI below 36% for the most favorable lending terms, but you may still qualify if it is over 36%.

If your goal is to lower your monthly payments, you may want to consider a loan modification rather than refinancing. Reach out to your lender for more information on available options.

Whether you want to refinance your current auto loan or apply for a new one, Mariner Finance can help you. We offer online and in-person loans delivered with five-star customer service.