Yes, you can switch your car loan to a different lender. This is called refinancing. Refinancing can be a good option if you can get a lower interest rate, which can save you money on your monthly payments.
Do I have to make another down payment if I refinance my car loan?
It is not necessary in all cases. When refinancing a car loan, it may be possible to avoid making another down payment, depending on the lender and your credit history. Some lenders may allow a "no-cash-out refinance," where the borrower does not receive any additional funds and the original down payment is transferred from the old loan to the new one.
In some cases, if the new loan amount is less than the outstanding balance of the original loan, the difference may be used as a down payment towards the new loan, eliminating the need for a separate down payment.
However, if the new loan amount exceeds the outstanding balance of the original loan, a down payment or additional funds may be required to cover the difference. This scenario can occur when the borrower refinances the remaining balance and adds any additional desired funds, such as financing accessories or extended warranties, into the new loan.
It is important to note that some lenders may have specific requirements or terms related to down payments and refinancing, so it is advisable to check with the lender or research their policies before making a decision.
Will my credit be checked if I refinance my car loan?
Yes, your credit will be checked if you refinance your car loan. This is because lenders want to make sure that they are lending money to responsible borrowers who are likely to repay the loan on time. A credit check will also help the lender determine what interest rate to offer you.
