The process of refinancing a car is similar to that of refinancing a home loan, whereby the existing loan is replaced by a new loan which is negotiated with more favourable terms for the borrower. Auto refinance has become more popular since interest rates have become low.
It is more applicable if the existing loan is for an expensive car as that gives greater scope for money saving by refinancing.
The amount of money you will save will vary according to how much of your current loan is outstanding, the length of time left on the loan and the difference between the interest rate on the old and new car loan. You will need to shop around and find out which provider has the most competitive interest rates. Shopping around online is certainly easier than physically visiting the various providers.
Use a car finance calculator to help to evaluate your options.
Important: when disclosing your financial details online, make sure that the site you are visiting is secure.
Typically, cars financed from a dealership have a high interest rate. If this is the case it may make sense to consider a refinance car loan. Ideally there should be at least a 1% difference between this and your existing loan.
Your existing lender may penalty charge you for early redemption of your loan. Additionally, you may be charged fees for the new loan application