Automobile Loans: Refinancing Frequently Asked Questions

Refinancing an auto loan is a smart maneuver for buyers hoping to receive a lower APR, reduce monthly payments, or extend the loan term. Even though automobile refinancing is a common practice, few people take advantage of this option. For the most part, buyers are unfamiliar with how car refinancing works. If you have ever thought about a refinancing, consider the following frequently asked questions about an auto loan refi.

What is an Auto Loan Refinancing?

When a car buyer opts to refinance their current auto loan, they essentially replace the existing vehicle loan with a new loan. Thus, the new auto loan lender pays off the old note, and the buyer begins making monthly payments to a new lender.

What are the Benefits of Refinancing an Auto Loan?

In a nutshell, people choose refinancing as a way to save money. For example, if the existing car loan rate is extremely high, refinancing is a great way to acquire the best car loan rate. If your credit has recently improved, refinancing is perfect. Moreover, if you chose to extend the terms, the new low rate car loan will result in a noticeable savings.

Can I Refinance an Upside-Down Loan?

Unfortunately, if you owe more money than the vehicle is worth, lenders will not refinance the auto loan. Nonetheless, there are ways around this common problem. You have the option of paying more toward the existing auto loan. Once the amount owed on the vehicle is less than the car’s value the door for refinancing re-opens. As well, there is the option of refinancing with a down payment. The funds used as a down payment is purposed to reduce the vehicle’s negative equity.

Can I Refinance Any Loan Amount?

No. To refinance an auto loan, the amount owed must exceed $7500.

Is it Possible to Refinance Car Loan with Bad Credit?

Because a large number of lenders offer loans to persons with low credit scores, finding a lender with bad credit is easy. However, you must apply for loans in the right place. It is essential to research different lenders prior to submitting a refinancing application. Sub prime or high risk auto lenders may offer the best auto financing rates.

Can I Refinance Using the Same Lender?

No. Auto loans must be refinanced with a new lender. Compare rates from different auto loan lenders before choosing a loan company.

Can I Increase the Approval Odds?

Even though there are lenders willing to offer refinancing loans to persons with poor credit, lenders do not guarantee the best rates. Acquiring a low rate refinance can be as easy as maintaining steady employment for at least six months and improving credit rating by reducing debts and avoiding missed payments.