Refinancing your car loan can be a smart financial move if it saves you money on interest or reduces your monthly payments. But it’s important to know what to look for to make sure you’re really getting a good deal.

1. Interest rates

The primary reason most people refinance their car loans is to get a lower interest rate. Interest rates can fluctuate based on market conditions, so if rates have dropped since you took out your original loan, refinancing could save you money. Compare offers from multiple lenders to find the best rate. Even a small reduction in interest rate can lead to significant savings over the life of the loan.

Be very careful to look at the total finance charges you’ll pay—sometimes you might get an offer for new terms that make your monthly payment much lower, but they jack up the interest rate to where you’re paying way, way more in total.

2. Loan term

When you’re refinancing, you have the option to adjust the length of your loan term. Extending the term can lower your monthly payments, which can be helpful if you’re under financial strain. But a longer term means you’ll pay more in interest over the life of the loan. Conversely, shortening the term can help you pay off the loan faster and save on interest, but it will mean you have higher monthly payments.

3. Fees and costs

Refinancing your car loan isn’t free, and it’s important to be aware of any fees or costs the new loan might have. These can include application fees, title transfer fees, and early repayment penalties on your current loan. Ensure that the savings from the lower interest rate outweigh these costs. Some lenders may offer no-fee refinancing, so be sure to ask about this option.

4. Credit score impact

Your credit score plays a big role in the interest rate you’ll be offered. If your credit score has improved since you took out the original loan, you might qualify for a lower rate. Before you apply for refinancing, check your credit report and score. Address any errors on your report and consider improving your score to get the best possible rate.

5. Lender reputation and customer service

Not all lenders are equal. Research potential lenders to ensure they have a good reputation and offer strong customer service. Read reviews and consider reaching out to current customers for their experiences. A lender with good customer service can make the refinancing process smoother and more straightforward.