Wednesday, 12 November 2014

Aspects to consider before refinancing your Auto Loans

Change brings opportunity!

Changing your current lender will give you the opportunity of obtaining low rate auto loans. Don't think that refinancing option is available only for home owners. Today, there are modern lenders and online financing companies that are willing to refinance your auto loan.

It is possible that you may have received a raw deal because of the following reasons:

>> You were too excited about the car and forgot to scrutinize the loan details

>> Interest rates were high when you applied for the loan

>> You didn't have established credit history

>> You had a bad credit score

>> You were unemployed

>> You were in bankruptcy

Auto refinancing option is not limited to people with above mentioned reasons. If you have made regular payments on your car loan, you can refinance it to make it more affordable.

Can I refinance my Auto Loan now?

Although finance experts recommend waiting for at least first 12 months to change a lender, you can refinance your loan anytime. But, before you start searching for a new lender, you must keep the following aspects in mind:

How much will you save?

Refinancing is all about saving money and reducing financial burden. If you wish to refinance your car loan, compare the amount of expected savings and the total cost of refinancing (including penalties, documents preparation charges and other expenses). You can use an online auto loan calculator to work out the calculations. Refinance your auto loan if you can save substantial amount of money.

Do lenders have approval criteria for refinancing?

The following list represents the general criteria for getting approval on auto loan refinancing program:

>> You must be at least 18 years old

>> Your minimum gross monthly income should be $1800

>> Minimum loan amount should be $5000

>> The vehicle should not be driven for more than 100,000 miles

>> The vehicle should not be older than 8 years

>> You should not be in bankruptcy

Is there is a penalty period?

Many auto loan contracts include a lock-in period or a penalty period. If you refinance your loan during this period, you will have to pay high penalty fees. So, read your loan contract thoroughly and ask your current lender about it.

Are you aware of refinancing fees?

Even though lenders don't charge any fee for refinancing an auto loan, your state will charge a title transfer fee. Most lenders will pay the fee on your behalf to the state authorities and then, add it to the total loan amount. But, it is important to discuss it with your new lender and ensure that the fee is paid on time.

Does the new lender charge any pre-payment penalty?

Pre-payment penalty is an important point to be considered while choosing a new lender. Remember to select a lender that doesn't charge any penalty for making early payments because it will help you in paying off your loan early.

Consider these important aspects before refinancing your auto loan. They will help you in obtaining a better deal.

Obtain low rate auto loan refinancing program by applying on Rapid Car Loans. The online auto financing company will ensure that you get quick approval, cheaper rates and stress-free loan process. Apply now to obtain the best auto refinancing program today.