Car Refinancing – Really Easy Way of Making your Payments Affordable

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!

Car Refinance - Which Cars Cannot Be Refinanced?

A car is a heaven on wheels.

It is the ultimate American dream. And to make it a reality, you obviously need to avail an auto loan. But are car loans really affordable?

It is for this reason that car refinancing has become a lucrative option. But, you must know that car refinancing is not for everyone. The economy has suffered the worst crisis and everyone is affected by it. Lenders have become more cautious and they consider a few selected cars unworthy for lending.

WHAT KIND OF CAR WON'T BE REFINANCED BY A LENDER?

An Old Beauty

When you refinance your car, you must remember that the rules of real-estate refinancing don't apply. Unlike your home, your car's value depreciates every single day. So, a very old car is generally rejected by lenders.

Another aspect is LTV. The Loan to Value ratio is a depiction of how much you owe vs. your car's current value. Lenders understand that being a depreciating asset, a car's LTV will be higher than 100%. But a very old car will have an exponentially high LTV value. This means there are higher chances of an up-side down loan. So, lenders stay away from cars older than 7 years.

Salvaged Car

When your vehicle is damaged to the extent that is deemed as a "total loss" by your insurance company, it is given a salvage title. Each State has different criteria for considering a car as salvage or junk.

Mostly if your car sustains damages worth 75% or more, it is given a salvage title. But each State has its own rules. E.g. Florida considers a car as junk if the car damages are worth 80%. Several States also use the salvage title to identify stolen cars.

If your vehicle has a salvage title, its market value will be very low. This will increase the LTV ratio. Lenders usually stay away from refinancing such cars because of the higher risk involved.

To refinance, your vehicle must have a clean title. Now, the title will obviously have lien against it, as you are still to pay off your old loan. But by no means, the car should be severely damaged, stolen or repossessed. It is also important that the odometer shouldn't be rolled back.

Customized Car

Have you altered your car to enhance its performance? Have you worked on its engine? Have you customized it according to your style?

Well, it means you have modified your car. Such cars fetch less value in the market.

The reason - Would you like to buy a car that doesn't go with your style? The answer is in negation, isn't it?

Everyone has a personal choice and no one will want to ride in a car stylized by someone else. So, lenders are clearly less interested in a customized car.

Commercial Vehicle

If a car is used for business purpose, it's obviously driven for longer distances and is constantly being used for heaving heavy equipments. More use causes rapid depreciation in a car's value. This means the car won't be useful as collateral.

In this scenario, you cannot really blame the lenders for not refinancing you.

So, these are few of the car types which face problem in the refinancing market. But it is important to understand that nothing is black and white. A lender may be impressed by your income and financial stability and decide to refinance a car. Another lender may decide to refinance your car even if it is eight years old and someone will reject even a four year old car.

So, I would like to tell you that never lose hope or get discouraged. All you need to do is search for a lender who will accept your application. And the best way to do it is by using the web.

Don't wait anymore; get a low rate car loan at the earliest. Emancipate yourself from an agonizing loan today!