If you are making monthly car payments, you might be considering refinancing as a way to decrease your costs. It’s not complicated, but it helps to know a bit about how to refinance a car before you make any decisions.

Simple Concept

Refinancing is really quite simple. It just means replacing an old vehicle loan with a new one. The new loan provides you with better terms and conditions so you spend less.

Gather Info First

Some key information will make the refinancing process easier. First of all, you need to have two preliminary numbers:

You may discover that the value of your car is less than the amount you owe on your current loan. If this is the case, you are “upside-down” on your car financing. You may have trouble finding a new lender willing to refinance in this situation, but you can still try.

Once you know your vehicle’s value and the amount of your current loan, you should also collect the following information:

Finally, you may want to consider checking your credit rating before you inquire about refinancing, especially if you are worried about bad credit.

Decide Where To Ask And What To Ask

Now you can go shopping around for refinancing. Places you can look are:

  • Banks
  • Financial companies
  • Credit unions
  • Online banks/lenders

Some people don’t realize that they can also go to their current lender to ask for new loan terms. Also, refinancing networks, like CARCHEX, compare nearly 100 different lenders and provide you with 3 or 4 lenders with the best rates to choose from.

Before you talk with new lenders you should decide if you want to make lower monthly payments or maintain the same payment but decrease the length of your loan term. In the second case, you will pay less interest overall.

When communicating with potential lenders, be sure to ask about:

  • Monthly payment amount
  • Loan term (how long you will have to pay)
  • Early termination fees (Is there a fee for paying off the loan early?)
  • Is the interest rate fixed or variable?

Closing The Deal

Once you decide on a lender, they will ask you to sign a new loan contract. Make sure you read the contract thoroughly and ask questions if you are unsure about something. After you sign, your new lender will send you a check. With this money, you will pay down your original loan obligation. You will receive payment requests from your new lender as soon as the refinancing is processed.


Refinancing a car or truck loan is not complicated, but it pays to have some information beforehand to make the process easier. When you go with an auto finance network, like CARCHEX, you save time since you don’t have to go shopping for the best rates. The lead finder service does all the work for you.

About The Author


Joe Campanella is the EVP of Business Development for CARCHEX and oversees partner relationships. Joe possesses 12+ years of experience building sales/customer service teams and securing strategic partnerships. He is a sports enthusiast who enjoys mountain biking, surfing and snowboarding in his spare time.

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