If you are able to refinance a car loan at a lower interest rate than what you originally obtained you may be able to save as much as $60 a month on your car payments. While the process of learning how to refinance a car is simple, meeting the requirements that are set forth by the financial lenders might be difficult. Companies that offer car financing have a list of requirements that must be met before they will consider offering you a new auto loan. The following are some of the requirements that must be met in order to refinance auto loans.
Car financing companies will require that the value of the car must be more than what is owed on the loan. Sometimes people will try to refinance a car when they owe more than what the value of the car is worth. Almost all lenders will offer a car refinance option if you are in an upside-down loan. To get out of the upside-down loan and possibly qualify for an auto refinance you will need to pay more than your monthly car payments in order to lower the amount that you owe on the car. Once the amount is lowered you may qualify for a new loan that can be used for financing a car.
Another requirement car financing companies will look for when people try to refinance car loans is how much you owe on the car. All financing companies require that you owe more than $7,500 on your existing car loan in order to qualify you for a loan to refinance a car. Some financial lenders may waiver this minimum requirement but it will require you to fill out extra paperwork. The minimum amount required on an existing auto loan is set because an auto refinance will extend your loan payment, and it isn’t cost-effective for amounts less than $7,500.
The last requirement needed to refinance a car is a fair or good credit score. A good or fair credit score will ensure that you are getting the best possible interest rate a financial lender can offer you. Getting an auto refinance is still possible with a bad or low credit score, but you may not be offered the best interest rates. Knowing what lenders are looking for can help you prepare for the process required to obtain an auto refinance and help you get the best possible interest rates and loan terms possible.
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Car Refinance Misconceptions You Should Know
Choosing to refinance a car is a big decision and not one that should be taken lightly. When making this financial decision, you should seek out a comprehensive refinance learning center to help you get the information you need to make a smart decision. Before you can use this resource to your full advantage, however, you need to know what questions to ask. Committing to a refinancing option before you know all the facts can lead to unexpected expenses down the road. Getting the right information upfront, however, will provide you with everything you need to refinance your car in a way that saves you money.
The most important questions about your auto refinancing plan are in regards to the interest rate. Learn everything you can about interest rates and how they work from a good refinance learning center. This little number will make a big difference in how much you ultimately pay for your vehicle. The goal should always be to secure a lower interest rate. Even if your monthly payments are lower, if your interest rate is high, you’ll lose money in the long run. Be sure to find out whether the rate you’re being offered now will change if you wait a few days or weeks to commit to the refinancing option.
The next tricky area a refinance learning center can help you navigate is the world of hidden fees. You could be hit with several unexpected fees that are due upfront when you refinance. You may be required to pay a fee for refinancing, an application fee, or other costs. These could be due all at once or hidden in the loan itself. Make sure you’re familiar with all the potential fees you could be faced with so you can ask specifically about each one. This will help ensure that you know exactly what you’re paying for and where every dollar is going.
Finally, take your time comparing auto refinancing options and do all the math for every one. You should calculate how much you will pay for your car on your current loan in comparison with the total you will pay with various refinancing options. If getting the numbers straight seems like a big task, a refinance learning center can help you learn what every term means and how it figures into your final costs. When you’re armed with a solid understanding of the process, costs and benefits of refinancing a car, you’re in an excellent position to get a good deal.