« Stock Trading | Main | Personal Financial Freedom »
Auto Refinancing
Auto Refinancing is a choice car owners typically make when they are hoping to save money on their current car payments. If your credit has improved from the time you first financed your car, you may in fact qualify for lower interest or annual percentage rates (APR), and have more options available to you such as extending or shortening your loan term. The key is recognizing when improved credit, a trend of consistent payment, and/or better financial standing has put you in a stronger position to bargain for how you will pay off your car. If you’re sure that the outcome is going to be worthwhile, auto refinancing is a must.
However, there are some hoops you must jump through before you can reap the rewards of refinancing your automobile.
The value of your car must exceed the balance you owe on it. Auto refinancing is clearly prohibited in situations where the car owner is locked in an upside-down loan (i.e., owing more than a car is worth). If you find yourself locked in an upside-down loan, payoff as much of the loan as it takes for your outstanding balance to be less than the value of the car, then try to refinance.
A car can only be refinanced if it is less than five years old. This means that a good number of used cars won’t qualify for refinancing, and if you wait too long to refinance your new car, you’ll find yourself equally out of luck.
The overall balance owed on the car must exceed $7,500. Refinancing can only occur when there is a significant chunk of money still owed. If the money owed is less than $7,500, it provides little to no incentive for a lender to consider offering you lower rates on your car loan.
Once you know that you qualify for auto refinancing, you can either meet directly with a lender, or apply online for your refinance loan. Before you apply, however, you should follow these key strategies:
Know what you’re after – Do you want lower monthly payments? Lower interest rates? An extended loan period? These are all questions you should have answered before refinancing your automobile. Shorter loan periods and better credit standing will qualify you for lower interest rates; a longer loan period will qualify you for lower monthly payments. Determine what you want, what you are most qualified to get, and go into the application process with your goals firmly in mind.
Have your paperwork in order – You’ll need your last car loan statement, your credit report, and your last income tax forms. By having all your paperwork in order when you go to apply for your loan, it’ll help you get through the refinancing process that much quicker, smoother, and more than likely with the outcome you hoped for.
Shop Around – Remember that a car can only be refinanced by a different lender from the one you currently have. With so many lenders now offering their services online, comparing quotes from different lenders is easy. Do your homework, and make sure that you are getting the best auto refinancing possible.
Topics: Auto Loans |
