Refinancing a car loan is easier than refinancing a home loan. You can save thousands of dollars in interest if you do your homework well. You should opt for car refinance if you will end up with significant savings on your loan. Ideally, you should refinance a car loan if:
a) You applied for an auto loan through a dealership and thus you were charged higher rates.
b) Your credit score has significantly improved and thus you will qualify for better rates if you refinance.
c) The interest rates have dropped since you were approved for your current loan.
To refinance the loan, follow the following steps:
1. Review the terms of your current car loan
Before you start looking for a new auto loan, know where you stand with your current loan. Find out your current pay off amount, how many months you have left on the loan, amount of interest rate you are paying and whether there is a pre payment penalty.
2. Find out if your car qualifies for refinance
Lenders have different qualification requirements for car refinance. Find out if your vehicle qualifies for refinance from the lender you want to approach. Most lenders will not refinance a car that:
• Has a salvage title
• Is used for commercial purposes
• Has more than 70,000 to 100,000 miles
• Is more than 7 years old
• Has less than $7,400 left on the loan
Some lenders do not refinance RVs or motorcycles. Other lender offer car refinance for specific vehicle models.
3. Compare the rates charged
Contact a number of lenders and request for car refinance quotes. Use the Internet to search and compare the rates charged by different lenders. Make use of the Interest Rate Chart at My Auto Loan website to find out the rates for all types of loans. Find out the national average interest rate and compare it to the rate that lenders will give you. When refinancing, you are likely to pay the rates charged for a used car.
4. Find out how much savings you will get
The purpose of refinancing is to save on your loan and thus reduce your chances of defaulting payments. Find out how much refinance will save you. Use online car loan calculators to get estimates of your savings.
5. Refinance your car loan
If refinancing your loan still seems like a viable option after doing your calculations, look into the details of the lender you want to refinance with. Find out the fees you will have to pay. Some banks charge processing fees and fees to transfer and reregister the vehicle. Also, find out if the loan comes with any pre payment penalties. Generally, you should look for a loan that will not penalize you should you opt to pay it off early. After comparing all you options, apply for auto refinance from a bank with the best deal.
Contact My Auto Loan for your car refinance needs. Save time and money by applying for the loan online.