An auto refinance is an automotive loan that pays off your existing loan. Many consumers know they can refinance a mortgage, but have no idea they can refinance their automobile. The great news is it's much simpler and faster to refinance your automobile than your home.
Once approved, a new lender (bank) pays off your old loan and the title to your vehicle is transferred to your new lender. Typically your new lender will handle the title transfer.
Consumers often refinance to get a lower interest rate in order to reduce their interest costs, or to lower their monthly payments. Automotive rates are at low levels, which means consumers are increasingly taking advantage of this by refinancing.
As with any personal finance decision, it really depends on your individual goals. There are several situations where refinancing makes sense:
If your credit has improved. When you bought your car, maybe your credit history wasn't the best. But if you've been making consistent timely payments, there is a good possibility your credit has improved and you may qualify for a lower interest rate. This should reduce your monthly payment and save you money in interest over the life of the loan.
A car dealer charged you too much interest. When you originally bought your car, the car dealer might have charged you a higher interest rate than you could have qualified for elsewhere. This often happens to shoppers who didn't check their credit score or know what rate they might qualify for before buying a car. With approximately 50% of Americans not researching financing options prior to purchasing a car, there's a good possibility you can correct this by refinancing and getting a new loan with a lower interest rate.
Struggling to make payments. You may have bought a vehicle a little beyond your means, or overestimated your ability to pay off your current automotive loan. Or maybe you're facing unforeseen financial challenges. By refinancing, you could lengthen your loan, which will lower your payments. Lengthening your current loan comes with additional areas to consider. If you extend your loan, you'll most likely pay more in interest. This can be a good alternative to missing payments and damaging your credit.
When interest rates rise or drop. Interest rates vary for a many reasons: a new President is elected, disruption in the marketplace, regulatory changes and numerous other variables affect interest rates. If rates are lower now than when you first got bought your car, refinancing could help you pay off your loan sooner or save you money on interest. You may also want to consider refinancing if interest rates begin to rise before you miss the opportunity to improve your current interest rate.
Typically, the only fees associated with an auto refinance loan are fairly standard transfer of lien holder fees (usually $5 to $10) and state re-registration fees ($5 to $75). These estimated fees may vary by lender, state of residence, etc. Be sure to check if your existing lender has any pre-payment fees. This could factor in to your decision to refinance.
Savings depend on several areas 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. Estimate your auto refinance savings with our FREE Loan Analysis.
Yes. With automotive refinance rates near historically low levels, an increasing number of consumers are choosing to refinance their existing automotive loans.
Start by completing our FREE loan analysis. If you are pre-approved to apply, you'll need some information regarding your income, employment information and your VIN number. Don't worry... we walk you through every step. Once approved and you accept one of the offers, the lender will follow up and help collect any additional information needed.