The ability to refinance a car loan has been around for quite some time, but not one of the most commonly used options to reduce one’s monthly debt. Typically, when a car owner decided he was paying too much, he’d simply turn his car and get another one with terms that were more attractive to him at the time.
Over the past few years auto refinancing has become almost as popular as home refinancing. Who can refinance? Anyone who has a car loan. Chances are that if you got your first loan, you’ll be able to get the second one as well.
Refinancing a car loan is similar to refinancing a home loan or mortgage. Your goal is to reduce your APR, thereby reducing your monthly payments. Unlike a mortgage refi, however, you don’t need to pay for or even supply an appraisal of your vehicle, and there are no closing costs (although a few lenders may charge a small administration or application fee). You are simply trying to pay off one loan with another.
Another fairly major difference is that you can’t refi with the original lender. You will need to find a new lender and pay off your original loan. This entails transferring title from the old lender to the new lender and this is something that is handled between lenders; they aren’t going to give you the title to resubmit. You may need to pay a transfer fee to your state; some states charge $5 or $10 for this.
Because there are no closing costs or other fees associated with refinancing a car loan, you don’t need to perform intricate mathematical calculations to find a break even point or learn what your possible savings would be. If you can lower your APR by even 1%, you’re ahead of the game. The official website will guide the person about the advantages of refinancing the car loan. A signup at this page will offer all the essential and important information to the person to increase the bank account with real cash.
Refinancing is really a powerful option. Let’s say you bought your car a few years ago when a repossession or a bankruptcy still appeared on your credit report. If the time limits have since passed, get a copy of your credit report, have these removed, and apply for a new loan. You could easily see your APR plummet from 25% to 5% – 7%.
Maybe your APR was high because you had a poor overall payment history, but you’ve cleaned up your act and now your credit report shows everything has been paid on time for over a year. You could easily qualify for a much better rate.
Don’t assume that you need to have a high APR to think about refinancing! Since all types of interest rates are falling you should do some quick math to see what you could be saving each month and over the remaining term of your loan. An almost negligible drop from 7% to 6% could save you a good amount each month.
For instance, if you currently have $17,000 and three years remaining on your original loan at 7%, your current payments would be about $532 excluding sales tax. You could refinance at 6% for four years and bring your payment down to $413 a month with a monthly savings of $119. If you don’t want to stretch it out another year, refinancing the same loan at 6% for three years will reduce your payments to $524.
A few minutes with a calculator will show you what your options can be. You might be pleasantly surprised.