Car is one of the necessary property to have for every individual. Applying for a car loan is made easy with the help of various financial institutions. Refinancing your car loan is very similar to refinancing your mortgage.
Another lender evaluates your credit history, your current loan terms, and your vehicle, and determines if they can offer a better rate than your current lender. They will pay off your current loan and assume the rest of the balance.
Auto Refinance is not the most common form of loan refinance, mainly because many banks do not offer this product. However, it is a fast and easy way to put money back into your pocket. Plus now is a good time for an auto refinance.
What is the process for auto refinance?
Unlike mortgage refinance, the process does not take very long; some customers are able to refinance their auto loan in under one day, spending less than 20 minutes on the entire process!
Applying is typically quite easy. Usually, it can be done online and takes about 10-15 minutes.
Most lenders have the ability to supply a credit decision instantly, or can provide a decision within 15 minutes after application submission. At that point, you will be presented with your loan terms, to include the available interest rate.
If you decide to move forward, then call the bank to get things started. Likely, if you are approved, the bank will call you to get you started immediately into the process.
Should your auto refinance your loan?
Auto refinance gives you an opportunity to potentially lower your current interest rate and/or your monthly payments—therefore, it is a great idea to see if you would benefit from a refinance.
While anyone can qualify for a refinance, we especially recommend that you investigate auto refinancing if you:
- Pay more than 8% interest on your auto loan
- Have a recent strong payment history
- Took a loan at an auto dealership, which likely was subject to a “markup”
- Want to extend the term of your loan to lower your monthly payment
Auto refinance companies can’t compete with a 4% loan, and most won’t be able to help you with older cars with hundreds and thousands of miles, but you’d be surprised how many can be helped. can’t compete with a 0% loan, and most won’t be able to help you with older cars with hundreds and thousands of miles, but you’d be surprised how many can be helped.
Auto refinances for bad credit consumers are doable. Those with previously poor credit may be the best candidates. Making steady payments on your loan is key. Assuming that there has been some improvement in your credit performance since you obtained your original car loan, we think that you can refinance.
Have you made your car payments on time over the last six months to one year? (showing that you can make a car payment on a timely basis gives lenders confidence that you’ll repay their loan.)
Have you taken steps to improve your credit, no matter how bad it was, since you obtained your auto loan? (your entire credit history will be scrutinized, but more weight will be given to your most recent credit performance. As your FICO improves, your risk goes down, and therefore your interest rate will go down.)
Conclusion
As we’ve mentioned, lenders will look at many different factors when determining whether or not to extend you credit, so there are no universal rules about who will and who will not be approved for a refinance. However, we think you’ll have a good chance of success by implementing the above steps.