Car is a dream and high interest rates on auto loans a nightmare! If your nightmarish auto loan is giving you sleepless nights, it’s time to change it. You can alter rates, change loan terms and make it more affordable. This can be done with car refinancing.
Car Refinancing – Is it easy?
Refinancing your auto loan is a slice of cake. It doesn’t require much of your time because the process is simple. A new lender will pay off your old auto loan and your payments will be directed to him. Also, your car title will be transferred to the new lender.
Refinancing helps you to acquire better rates on your car loan. This makes your payments affordable and also, gives you a golden chance of improving your credit score.
Car Refinancing – Is it for everyone?
Refinance lenders work extremely hard in making your car loan economical. Every lender approves your application by keeping in mind his set of rules. Requirements vary from one lender to another. But, there are a few commonalities.
1. You must have a valid SSN.
2. Income of at least $2,000 per month.
3. You must have spent more than 6 months in your last 2 jobs.
4. You must have inhabited the last 2 places of residence for more than 6 months.
5. There should not be any open bankruptcy.
What Aspects should be considered before Refinancing?
Look before you leap!
Any decision which is taken without thorough thought can be troublesome in future. So, it is essential to ascertain your condition before jumping on the refinance bandwagon.
Pre-payment Penalty
If your current auto loan involves the clause of pre-payment penalty, you must be careful in refinancing your loan. Calculate the amount of money that you will save by refinancing. Compare it with the cost of penalty. Opt for refinancing only when the savings are substantial.
Refinance Cost
Your refinance cost will include a $50 documentation fee. You will also have to pay Standard Transfer of Lien Holder Fees ($5 to $10 approx.) and State Re-Registration Fees ($5 to $75). So, consider all these expenses before opting for auto refinance. If there is no major benefit of refinancing, then you must avoid it.
Extremely Low Loan Amount
Most lenders won’t refinance a car loan amount lower than $7,500. If you owe a very small amount to your current lender, then there is no point in applying for car refinancing.
Credit Issues
If your bad credit history was the cause of high interest rates, then you must check your credit score before refinancing. If there is no significant improvement in your score, rates won’t reduce. So, it is important to know your credit score before deciding on car refinancing.
You must take a decision after contemplating every aspect of the auto loan refinancing process. Remember that haste makes waste. Auto refinancing is crucial but, unnecessary refinancing can make your car loan a bigger burden. So, take ample time in making an accurate decision.
All the Best!
