Six Steps on How to Refinance Your Car Loan
Many people go on living with high interest rates and expensive car loans since they are unsure on how to go about the process of refinancing a car loan. Car loan refinancing can save you a great deal of money if implemented at the right time in the most appropriate manner. This article outlines six steps that will not only enable you to successfully refinance but to also manage your auto loan.
Step 1: Get organized – Before starting the process of refinancing your auto loan, you will need to be armed with detailed information about the vehicle. This means, you will need a duplicate of your current auto loan, the owner’s names and the VIN. VIN can be found on your registration paperwork or dashboard. In addition, you will need the model of your car, any modification performed on the car as well as the age of the car.
Step 2: Contact your current lender – The next thing is to contact the lender currently servicing your car loan and request for a pay off amount. The payoff amount is different from the outstanding balance and you should therefore be specific when asking for the accurate amount to pay off. You should also note how long till the quote expires. Many quotes run for four to ten days. Be sure to request a longer payoff period if you need more time to pay.
Step 3: Check your Credit Score – The new lender will base new interest rates on your credit rating in addition to other factors. It is therefore important to ensure that you have a better credit score than when you first applied for a car loan. A good credit score attracts better interest rates. Make sure your credit is up to date and free of any errors. Also offset any outstanding credit card debts.
Step 4: Comparison Buying - You can run online comparison of automobile loan refinancing. The process is simple and takes less than one hour. From the results you can get quotes and any other auto loan refinancing relevant information. While doing online comparison, it is necessary to take precautions and avoid refinancing scammers.
Step 5: Update lien, insurance and Bank information – After you decide to refinance your car loan, it is necessary to update lien, insurance and bank information to avoid problems later.
Step 6: Ensure the lien was paid – Before refinancing you should verify that the existing lien is paid in full and the paper work was processed properly.
In summary, vehicle loan refinancing should not be considered a daunting task as the process is simple and easy. Car refinancing saves you a lot of money.
Robert Worley has been entrenched in the car loan industry for numerous years and writes articles to help consumers understand the upsides and drawbacks of getting car loans and bad credit car loans. Robert is amazing at answering common, everyday questions in his articles and news posts.
Car Finance FAQ:
Question: What are my options for financing a high mileage vehicle?
Will a bank finance a car with over 100,000 miles on it? The car will cost under $5,000 and is a Pontiac Grand Prix, no older than a 2004.
Answer: When determining whether or not to approve a car loan, lenders take certain things into consideration, none the least of which is YOUR credit background. The better your credit score, the more likely they will be to approve your loan, regardless of the mileage.
If your credit score is lower, they will certainly consider the value of the car you intend to purchase, and the car’s mileage certainly plays a factor in it’s value. Most lenders will probably NOT want to get involved with a vehicle with over 100k miles.
The question is basically “will the banks lend for a vehicle that isn’t worth much”, and the answer is basically “no”, and honestly, the lenders who would, are probably lenders you want to stay away from.
Question: What is a formula for calculating how much my monthly payments would be on a car loan?
Isn’t there a formula for calculating how much your monthly payments are on a fixed-rate loan where you know the term, the amount financed, and the interest rate? Here are the numbers: $22,870 over 72 months @ 3.9%
Answer: It’s so much easier to just find an online loan calculator. They are everywhere.
The better question is why would anybody finance a car for 72 months? That’s at least 12 months too long and probably 24 months longer than it should be. If you can’t afford the car payments, buy a cheaper car. Don’t drag the payments out to 6 years. You have no idea what you’ll be doing 6 years from now, why obligate yourself to a debt for that long a period.
Question: I want to give up my car that the repo people have been looking for.. HOW? HELP?!?
I lived in Michigan and financed a car, paid on it for awhile and then lost my job. Instead of giving the car back I decided to move outta state with the car. Its now been like a year and a half and I’m afraid of what’s gonna happen and I just wanna give it back. How do I? I can’t take it back to Michigan.
Answer: Call the finance company and give them your address. They will come to your residence and pick it up.
Question: Buying a car with a cash down payment?
I recently bought a car, I traded in my car and put a downpayment. I have a contract of sale that has the total price minus the trade in value minus the cash down payment plus taxes, fees, etc. and equaling the amount being financed. I got a couple other papers as well. Does that contract count as my proof/receipt that I made a cash down payment? Or should I have gotten anything else? Just want to make sure I have everything in order, these clowns have caused me issues before.
Answer: As long as it is clearly stated on the bill of sale, then that is sufficient as a receipt. Make sure the tax is calculated based on the net amount AFTER your cash down payment was made. Depending on the state you live in, your trade-in may decrease the amount you are being taxed on, as well. Rebates are subtracted after tax is added, based on the net amount of your financing.
Question: Can I get financed for a car with $4500 down payment and bad credit?
I’m 22 I have bad credit, but I have a steady job where I make $3000 a month. I have been at my job for almost a year. I have saved $4500 as a down payment. I can easily make monthly payments on a car $15,000 or less being that my rent and utilities are $500 and and my phone bill is $65. These are my only bills. Do you think someone will finance me. I need good advice from someone who knows something about this stuff.
Answer: That is not an unreasonable loan request, given that you are putting down (smartly may I add) a 20% down payment. Because of your credit, your interest rate will suck, but you should be able to still find a loan.
Question: Does anyone know what the law is in IL if you put money down on a new car and do not take delivery of it?
I put down money but have not signed any of the financing paperwork. I am having second thoughts of the buy. Can I get out of it without losing money?
Answer: Its up to the dealer. The money you put down is considered a “good faith deposit” and many if not most dealers would keep that money if you back out. Now, if they are unable to get you financed then you will get your money back.
Question: I bought a car from dealer but only put a 1000 deposit. What happens if I don’t bring the rest like I promised?
I signed the deal and agreed on a price, put down a $1000 non-refundable deposit and said that I will be there with the rest in 5 days when I pick up the car. I didn’t finance. What happens if don’t bring the rest and not take the car at this time. Besides losing $1k what will happen. Can they come after me and make me pay the rest?
Answer: They can’t come after you and force you to pay for a car you don’t want. But they will keep your $1000 because you agreed to let them have it if you backed out.
Dealers love guys like you because it’s the easiest grand they’ll make this week for sure. I wish my customers would come in and give me $1000 for merchandise they don’t take home.
Question: What can I do to buy a Chevrolet suburban 2010 at a good deal?
I am in the market to buy a suburban 2010 texas edition. I have a down payment of 5k and I want to finance the rest. I know the MSRP is around 41k and the invoice price is 38k but I want a lower price and zero percent financing for 5 years AND new car. If anyone has good tips please do let me know.
Answer: Are you aware that invoice does not represent what the dealer pays for the car? Dealers will be happy to sell you a vehicle at invoice. You can only get 0% financing when it is being offered by the factory. If that offer is on the table the dealer must participate which raises the cost or cuts into the profit.