We get calls everyday with questions about auto refinancing. It’s often confused with mortgage refinancing and the criterion really is much different. So let’s see if we can provide a quick overview of why this auto finance tool is becoming so popular.
Answers to frequently asked questions about refinancing an auto loan.
Q: What is an auto refinance loan?
An auto refinance is a loan that pays off your existing auto loan, similar to a mortgage refinance, but with a much simpler and faster process. You don’t have all the paperwork, detail, downtime with specialists and appraisers so you can complete the process within days of submitting an application.
Q: How does it work?
It’s very simple. Your new lender pays off your old loan and the title to your vehicle is transferred to your new lender. You now have a new loan and lender that you begin making payments to.
Q: Why should I refinance my existing auto loan?
Typically, consumers refinance to get a lower interest rate in order to reduce their interest costs, or to lower their monthly payments. Auto refinance loan rates are at very low historical levels, so our customers are increasingly taking advantage of this by refinancing. Chances are that your interest rate, even with great credit is higher than what is available today. Make sure you know that higher interest rates are more expensive and will cost you more over the same time period. You will be surprised at how simple and easy an auto refinance loan can be.
Q: When should I refinance my existing auto loan?
As with any personal finance decision, it really depends on your individual goals and what you want to accomplish. It’s different for everyone but the objectives are pretty much the same. If your goal is to reduce the amount you are paying in interest, you may want to consider an auto refinance loan with the same or reduced term as your existing loan. If your goal is a smaller payment, you may want to consider extending the term remaining on your existing loan, although this may increase the total interest paid over the life of your loans it will give you a cushion in which to work on the short term.
Q: Are there any fees associated with an auto refinance loan?
Typically, the only fees associated with an auto refinance loan are fairly standard transfer of lien holder fees which are usually $4 to $9 and, in some cases, a state re-registration fee of $10 to $70. These estimated fees may vary by lender, state of residence, etc. Be sure to check if your existing lender has any pre-payment fees. Most do not but it does not hurt to check before hand. This could factor in to your decision to refinance.
Q: How much will I save by refinancing my existing auto loan?
How much you save depends on things such as the remaining balance of your existing loan, the difference between your old interest rate and the new interest rate, the term of your new loan, etc.
Q: Are auto refinance loans growing in popularity?
Yes. We’ve seen a substantial increase in applications here at myAutoloan.com and the trend continues into this quarter. Since auto loan interest rates have been at historically low levels, an increasing number of consumers are choosing to refinance their existing auto loans.
Q: What do I need to do to apply for an auto refinance loan through myAutoloan.com?
Simply complete an auto refinance loan request. You’ll typically receive a response within hours, and if approved, you may receive up to four offers from competing lenders. If you’re approved and you accept one of the offers, the lender will take care of the auto refinance process for you.
There you have it – short, sweet and to the point. Hope this helps in your planning and best of luck to all as we push the economy forward.