Some Useful Tips on Refinancing Your Auto Loan
While there are many reasons to refinance your auto loan, there are also some factors to consider in approaching a refinance. Be familiar with the following tips to make sure you take the proper steps towards auto loan refinancing, meanwhile avoiding common mistakes and pitfalls of the process.
Most people attempt an auto loan refinance in order to save some money. Paying off a car loan to refinance the loan can lead to a lower APR. Your interest-rate varies depending on your current credit rating, but improving your credit opens up the possibility of refinancing a car loan and paying less interest. Its also possible to pay off your car loan quickly by keeping your payment amount the same despite receiving a lower rate. Refinancing at an interest rate of one percent less than what you currently pay can save lots of money over time, however, this may require you to apply for a loan with a different lender. Fortunately, a different lender will most likely be keen on your credibility if youve been making payments for at least six months.
Be aware of the fact that many lenders wont consider you for a loan thats worth more than your vehicle. You can figure out the value of your car through sites such as Kelley Blue Book. Remember, auto loans arent based on the value of your car, but instead on how much you owe on your original loan. If you had poor credit prior to financing your vehicle, dont panic. Improving your credit score should enable a lower APR that what youre currently paying. It may not be the lowest possible payments, but you still manage to save.
Dont approach new lenders without talking to your current one. A good payment history can result to a lower interest rate on your loan. Before switching lenders, however, make sure that your current lender doesnt charge any prepayment penalties or else you could find yourself deep in the red trying to pay off a penalty. Be cautious when approaching loan and make sure to be familiar with their policies. Although interest rates for used car loans can indeed exceed those of a new car, refinancing can get you a lower rate than those who dont qualify for the typical zero-to-three percent interest rate offered by manufactures. If you pay attention the numbers and follow the aforementioned refinance tips, you can relieve your debt and find yourself paying less on your auto loan.