Benefits of Auto Refinancing

There are several reasons that people have for refinancing their car loan. Naturally the top reason is to save money each month on their auto payments. When you refinance you can lower your monthly payment, get a better interest rate and either reduce or extend the duration of your loan.

Those who had bad credit when they bought their can and have since improved their credit score will benefit the most from car refinancing. With a better credit score you can expect much lower interest rates on your car loan. A drop of several percentage points on your loan can translate to thousands of dollars of savings over the life of the loan.

Auto Refinancing Requirements

While it would be great if you could refinance at any time, there are certain requirements that need to be met in order to qualify for car refinancing. First of all, the current value of your car has to be greater than the amount you still owe on the car loan. If you owe more than the car is worth this is called an upside down loan and lenders will not refinance this type of loan.

If you’re in this situation and want to refinance then you should do all you can to reduce the amount you owe on the car so the loan is no longer upside down. This will mean you will need to pay more than your monthly payment for some time.

Two additional requirements when refinancing an auto loan is that the car be less than 5 years old and that the new loan must be for not less than $7500.

How Does Car Refinancing Work?

Refinancing your auto loan is actually quite simple. First you’ll need to contact the current lender to request a payoff amount. Once you have this number you can go online to fill out an application for an auto refinancing quote. You’ll be asked for the details of the car, like the make, model and year, any extras like security systems or audio enhancements. You’ll provide them with the payoff amount for the loan and may even be required to provide them with the VIN. When you apply online for an auto refinance the approval process is instant.

Selecting an Auto Refinance Lender

When choosing a lender for your auto refinance don’t just go with the first offer you receive. Car refinancing is actually quite competitive and if you take the time to get several quotes you may save yourself even more money. Request quotes from at least 3 lenders and take the time to compare the rates and terms of each offer. Then make your decision based on the company that will get your refinancing with the lowest cost to you.

Related posts:

1. When Car Refinancing Makes Sense
2. 4 Automobile Refinancing Tips
3. The Right Way to Refinance Car Loans

It happens to so many of us when we go car shopping that the excitement of getting into that new car takes over and our emotions end up putting us into a car and monthly car payment that’s more expensive than we planned for. Instead of focusing on saving money and getting a cheap car loan we focus on the excitement and emotional boost that we get from a new car purchase.

Interest rates will vary depending on your lender of course, but some people end up with rates in the high teens which is crazy, even if you’re financing a car with bad credit. There are simple ways to keep your interest rate down, the most important of which is to take the time to compare rates from several auto lenders. You’ll also find that the length of the loan, the amount of the loan and your credit score will have an impact on your loan interest rate.

Once you’re into the new car you do have some options to lower your interest rate and monthly payments. Car refinancing can drop the interest rate by several percentage points and save you thousands of dollars over the life of your loan. And of course you’ll have lower monthly payments which will be a help to your budget.

Think of this, a car loan for 20,000 financed for 60 months at 12.5% will cost you $449.96 a month and $6997.53 in interest alone over the 60 months of the loan. If you refinance the car loan at a much lower rate of 6.99% your monthly payment will drop by over $50 and you’ll save over $3200 in interest. Pretty good reason to look into car refinancing isn’t it? Plus you’re payments are likely to be even lower than that since you’ll be refinancing less than the original $20,000 because you’ve already been making payments on the loan.

The usual financing rate for a new car with good credit is 7.99%, but you can find lower rates on a refinancing because the loan amounts are smaller and the duration is shorter. And you’ll be able to shop around so you could find an excellent interest rate. Car refinancing is certainly easier online and it’s less stressful than the initial purchase finance at the dealership.

You’ll also want to consider the full terms of the loan. Is it possible to repay the loan early in full or will you incur a fee for doing this? Make sure you read the fine print when you’re getting quotes for an auto refinance. You should also know that you can refinance your car even if you have bad credit. You may get an interest rate that’s a bit higher than you would get with good credit, but it should still be lower than the current interest rate, especially if you had bad credit when you initially bought the car.

Car refinancing is just a good financial move. Anytime you can lower your interest rate and save yourself money you should take the opportunity to do so. Even $20 a month can make a difference and you’ll then be able to use that money for something else.

Related posts:

1. Benefits and Requirements of Car Refinancing
2. Is Refinancing A Car Loan A Good Idea?
3. 4 Automobile Refinancing Tips