Auto Refinance Loans-May Be An Option For You

It should come as no surprise that the economy isn’t exactly healthy right now. Unfortunately, a lot of honest people who made large purchases are now finding it more difficult to keep up with their payments. It’s safe to say that a lot of people have heard of refinancing their mortgage, but not very many seem to be aware that auto refinance loans also exist.

Depending when you took out your car loan, interest rates may have fallen substantially. You could save a bundle, but how much you save will be determined by the interest rate you get, how much you still owe, and the term of the new loan. That being said, it can be worthwhile to look into refinancing because it could save you a lot of money.

If you had less than ideal credit when you took out your loan, but have been doing a good job of making all of your payments on time, then it’s a safe bet that your credit score has improved during that time. When you had poor credit you didn’t have very much bargaining power, and you had to accept whatever offers you were given to take out your car loan. But now that your credit score is higher, you are now in a position for a better rate.

This kind of thing really does happen, and the following is an actual example (though we are changing the first name to protect the person’s identity). Jim’s credit was in rough shape a few years ago because of some medical bills. But, regardless of his credit, he needed a vehicle to commute to work. He was able to find a good used car with low mileage, but his interest rate was a staggering 25%!

It wasn’t easy for him to make the payments, but he did whatever it took and made the payments on time for the following six months. Jim knew his credit picture was improving, so he looked into auto refinancing loans. While he wasn’t able to get an ideal rate, he was able to knock several percentage points off his loan. That one change saved him a ton of money and helped him re-establish himself financially.

The steps to getting a new auto loan are similar to those you would take if you were refinancing your mortgage. Because it is a new loan, you will have to fill out a new loan application. The lender will then do a credit check and base most of their decision on what your credit report says. However, if you are trying to get your new loan from the creditor of your initial loan, then they may compare the “old you” with the “new you”. In other words, they may consider who you are as a person, which is more fair.

If you do get a new loan, then your previous loan will be paid off and you will make payments based on the terms of your new agreement. Getting auto refinance loans takes some effort, but the money you can save makes it a valuable endeavor.