How to Refinance an Auto Loan

how to refinance an auto loan

If you are looking to refinance an auto loan. there are some steps that you should follow. Car loan refinance is a great way to get a better rate on your total loan. The car refinance rate will be lower than your current interest rate, and this can save you hundreds, if not thousands of dollars depending on the size of the loan. Here are some steps you can follow to refinance your car loan.

Step 1: Paperwork

Get all of your paperwork regarding the current loan organized. This will make it easier to deal with later. You will also want to gather some important pieces of information that the new lenders will need. Some of these are your driving history and car information.

Many times people refinance because their credit has improved from when they signed the loan. A lower credit score a couple of years ago could have resulted in you paying a higher interest rate. If you’ve increased your credit score, have it checked by one of the three top companies. You are allowed a free check every year without it hurting your score, so it would be wise to check it. If it is indeed higher than it was when you signed the loan, it would be in your best interest to check out possible refinancing rates.

Look around for potential lenders. There will be many out there who would love to give you a loan if your credit has increased. You can do

this search by looking on the Internet, in the Yellow Pages or even just by going to local banks and lenders in your area. Using the Internet can help you get some reviews of people who have used the lenders that you’re looking up.

There are often fees involved in refinancing a loan. Check out the new interest rates that you will be paying. It makes sense to refinance even if you can shave as little as a point off your loan. That can still save you hundreds. There are also transfer fees for transferring your loan to a new lender. This fee is normally not over $100. One other fee to consider is since you are transferring title, the car will need to be registered again and this can be between $100 and $200 depending on the weight of the car. You can then figure out how much you’ll be paying by using a refinance calculator.

Before you sign the loan, read over it and understand the new loan. Many people don’t see that there are hidden fees involved. They hide them in there while offering a very low rate to entice you to switch, since many just see they are lowering their interest rate. Make sure you read it to learn about these hidden fees. If you have concerns, just ask your lender, since they will have to answer you truthfully. You can always walk away before you sign if you find out there are hidden fees.

Source: www.autos.com

Category: Credit

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