Apply For Your Auto Refinance Loan
There are a few steps youll need to take in order to apply for an auto refinance loan. Once youve decided on a lender, youll need to gather all of the required documents before applying. This can include information about yourself, like your name, address, and social security number, as well as information about your vehicle and your previous loan.
If youre interested in applying for an auto refinance loan, its a good idea to wait to apply until your finances are in order. For example, if your credit score is near a threshold, you might want to take steps to raise your score before applying in order to qualify for lower rates. Once your application is accepted, youll need to begin repaying your new loan. Its a good idea to set up automatic payments each month to make sure you never miss a payment.
The automotive industry in America hit record highs in 2019 with an estimated $1.2 trillion in outstanding car loan balances. Today, 85% of new passenger vehicles are financed, with the average first-time loan payment rising to $554 a month.
If youre like many Americans, you may be paying an auto loan that is too costly. If your financial situation or your credit score has improved since you applied for your loan, you can renegotiate your loan terms.
Need Help Finding A Dealership
Sometimes, when you’re dealing with bad credit, you’re left with no choice but a bad credit auto loan with a high interest rate. Luckily, you dont have to stick with one forever. As long as your credit score improves and you have a good history of on-time payments with the loan to show, theres a good chance you could qualify to refinance with a better interest rate.
You can view and compare refinancing rates through our trusted partner if you fill out the secure refinance request form on our website.
If youre not looking to refinance right now but you need help getting started on the bad credit car buying journey, were here to help. At Auto Credit Express, we work with a coast-to-coast network of special finance dealerships that have the lending resources to help people get approved for bad credit auto loans.
Just fill out our fast, free, and easy car loan request form today, and well get started finding you a local dealer!
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So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
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Time Remaining On Your Loan
Refinancing and extending your loan term can lower your payments and keep more money in your pocket each month but you may pay more in interest in the long run. On the other hand, refinancing to a lower interest rate at the same or shorter term as you have now will help you pay less overall.
If your answer to When should I refinance my car loan? is Soon, review our current refinance rates and take a look at our auto loan refinance calculator to get a better understanding of whether refinancing makes sense for you.
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Appraising A Home For Mortgage Refinancing
A home appraisal for mortgage refinancing often, but not always, requires an appraisal. If youre planning on changing your loan term or cash out, you most certainly will need one to refinance.
An independent appraiser will visit your home and look at the interior and exterior to determine the value. Your lender will use the appraisers professional assessment to determine your refinance loan terms. You often have to pay for the home appraisal upfront. The appraisal can cost several hundred dollars which youll have to pay even if you dont end up refinancing the home.
Depending on the type of mortgage refinance loan , lenders may require 20% equity, or an LTV of 80%. Anything above and you could end up paying higher fees in addition to mortgage insurance potentially eliminating any financial benefit of refinancing.
Understanding Refinancing Your Car
Refinancing a car loan is like refinancing a mortgage, although its much easier and faster. And none of the lenders we checked charge fees, although you may need to pay a small title transfer fee imposed by your state Department of Motor Vehicles. Essentially, refinancing a new car means that you take out a new loan to pay off the old one. The new loan can be for the remaining duration of the old one or even shorter, though in most cases, it will extend the length of time youll need to pay off your loan. Know that taking on a longer loan could reduce or even eliminate any savings you might get from refinancing. Depending on the rate, term and the amount you still owe, refinancing could save you a lot of money.
One thing to keep in mind, according to Michael Saccucci, the director of statistics and data science at Consumer Reports, is that the earlier you refinance, the more you could save if you get a significant reduction in interest rates.
For example, suppose you were just five months into a 72-month, $32,000 new car loan at 6.6%. If you financed the remaining $30,162 at 3.39 percent for the remaining 67 months of the original loan, youd save about $3,000, said Saccucci.
What Do You Need To Refinance Your Car
Since it isnt much different than making a car purchase, chances are you already have most of the information you need. However, before you take the leap, be certain that you are eligible to refinance. Consider whether you have defaulted on the lease or are in good standing. Be sure that your and working situation are stable and viable for refinancing. Provided you are eligible for the new loan, the next step is getting your documents together.
Tax information is a common request, so bring your most recent filing records. Additionally, three months of pay stubs from your employer are necessary as well. Plan ahead and bring your banking details. Often, people go with a void cheque to speed up the process and eliminate the chance of errors. You will also need relevant identification. Both a government issued photo ID and a second identification are required. A drivers licence and a passport are both suitable options. Additionally, be sure to have all the necessary details for your vehicle. Registration documents work well for this purpose.
Ensuring that you have all the essential documentation is not only important, but it is also a great way to speed up the process and develop a better rapport with the lender. Preparing ahead of time gives you a good opportunity to highlight all reasons for refinancing in an organized manner.
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You May Have To Pay A Penalty
Most car loans have prepayment penalties or other fees that youll incur if you pay off your loan early and to go to another lender. And that may determine whether its worth refinancing, says Ryan Mohr, owner of Clarity Capital Management, a Oregon-based fee-only planning and investment firm.
The only way to determine how all of these factors will affect your decision to refinance is to do your homework. No matter how new your loan is, periodically check refinancing offers, especially if interest rates are declining or your credit rating, income or other circumstances have changed.
Does Refinancing A Car Hurt Your Credit
If your credit score was low to begin with when you took out your original auto loan, you should check to see how much its improved since youve been paying off your car.
According to FICO, a minimum 720 credit score or higher is needed to qualify for the best interest rates, reports Mint Life. And AutoTrader.com notes, If youve improved your credit enough, your interest rate is likely to go down, and that means youll make a lower monthly payment and youll pay out less money in interest.
But if your credit score is still too low to be approved for a refinance thats worth it , play it safe and hold off. Go in blindly, and you might end up wasting money on loan application fees or be approved for a new loan thats only marginally better than your existing one.
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Looking Elsewhere When You Refinance Your Car Loan
While staying with your current bank is easy and convenient, it could be costing you. By looking elsewhere, you widen the financial options available to you. It could land you better refinance deal, saving you hundreds over the course of your loan.
Understand the potential by contacting our team of refinancing specialists. We have decades of industry experience, as well as access to a wide range of lenders, to quickly and thoroughly check that youre getting the best deal with your car loan refinance.
Here Are Some More Details About Penfed Credit Union
- Membership required You must be a member to qualify for an auto loan from PenFed Credit Union. Joining is easy, and you dont necessarily have to be a member of the military.
- Large loan range PenFed Credit Union offers auto loans ranging from $500 to $100,000, depending on your loan term.
- Doesnt refinance its own loans If you got your current car loan from PenFed Credit Union, it wont refinance your loan. The lender only refinances auto loans from other lenders.
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When To Refinance A Car
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Figuring out if and when you should refinance a car can be tricky, but if you approach it the right way , youll be able to make the right choice. You should refinance a car when it could help you save money, get you a lower payment or both. You should probably skip refinancing if youre underwater on your current loan, youve bought the car recently or your current loan has prepayment penalties.
Heres more on when to refinance a car and when to wait.
Should I Overextend The Terms Of My Car Loan
On paper, it might sound like a good idea, since a 36-month loan refinanced to 48 or 60 months lowers your monthly paymentsbut it also tacks on more interest for you to pay.
Unless youre seriously in danger of missing payments or defaulting on your loan altogether, avoid refinancing into a loan that would extend your current one, writes Stephanie Taylor Christensen of Mint Life. Your monthly payment may go down, but youll end up forking more money to the bank or dealers financing arm over the life of the new loan.
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Can I Refinance A Car If I Don’t Have Great Credit
Although it may be harder to get approved, refinancing a car loan with less than ideal credit isn’t impossible. Sometimes, it’s as easy as finding a creditworthy co-signer. Or, you may need to wait a bit while you build a higher credit score or show you have a better payment history to prove your eligibility. Asking your lender about your refinancing options will help ensure that you can get a competitive rate.
What Is Needed For Refinancing
To refinance an existing loan, you need:
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Should I Refinance My Car Loan Or Mortgage First
When you have multiple types of loans, it can be difficult to decide which one to prioritize. This decision becomes increasingly important when you have the opportunity to refinance your mortgage or car loan .
While it would be nice to refinance both your auto loan and mortgage at the same time, doing so might not be practical. Refinancing one loan could hurt your chances of qualifying for decent rates on the other. But sometimes, it can actually help your next credit application.
Heres what you need to know when deciding between refinancing your car loan or mortgage first.
2021 Auto Refinance Rates
Coronavirus Auto Finance Relief
COVID-19 has hurt lots of peoples finances. If youre worried about being able to keep your car, you may be able to get some help. Credit Karma has gathered a list of automakers and lenders that are offering relief options. We also have some other resources if youre looking for financial assistance.
But you may be looking to refinance to take advantage of lower interest rates which resulted from the Fed dropping its rates because of the pandemic. If thats the case, youll want to consider the advice in the article above.
In addition, some dealers are offering extreme financing deals for new vehicles, which may make sense for you if you were already considering trading in your car.
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Apply For Anauto Refinance Loan
Once youve shopped around, collected all of your information and made a decision, youre ready to apply.
Youll need to complete a loan application for the lender you choose. This is where the documentation you gathered can come in handy, as you may have to provide it in the application. This application will count as a hard inquiry, which can lower your credit scores by a few points.
If your loan is approved and you sign the loan paperwork provided by the lender, you should get a document from your lender with all the terms of your new loan. Keep a copy for your records, as it will include details on when your payment is due, the minimum amount youll need to pay each month and your options for making loan payments.
You Cant Afford Your Car Loan Payments
Maybe youve lost your job. Or perhaps you overestimated your ability to pay. Usually when refinancing, youll have the option of extending the loan beyond the original ending date. That, along with any reduction in your rate, can reduce your monthly payments. But that will also eat up some or even all of the savings from refinancing. As a last resort, you also could consider a cash-out refinancing, in which a lender will refinance your loan and give you cash up to and in some cases more than the difference between the amount you owe and the vehicles value, if higher. But such borrowing is extremely risky, especially since youre already in a financial crisis.
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Why Should I Refinance My Auto Loan
Have you ever bought something, only to see that same item go on sale a week later? Youre probably kicking yourself for missing out on a better price, but the best deal is not always going to be available when you need it. Who hasnt splurged for that extra package of cookies, only for a BOGO discount to be advertised a couple days later? Weve all been there.
The same is true for buying a car. You might not have gotten the interest rate you would have liked for your auto loan, but you were willing to settle for what you got. The good news is that lenders believe in second chances. There might be an opportunity to lower your interest rate or reduce your monthly payments, so long as you know when its the right time to refinance.
How Difficult Is It To Refinance
Each lender has a variety of requirements. It can be difficult to sort through them all, but Credit Karma can help you narrow down some of the options.
One lender requirement youll want to be aware of is mileage.
LendingClub will refinance a personal vehicle with fewer than 120,000 miles. But for some lenders, lower mileage could mean better rates. Navy Federal Credit Union, for example, offers loans with rates as low as 1.79% as of May 2020, but only for vehicles that havent logged 7,500 miles or more.
Also, be aware that some lenders may not refinance loans for your vehicles make or model. For example, if you drive an Oldsmobile, Daewoo, Saab, Suzuki or Isuzu, you cant qualify for an auto refinance loan through Capital One.
You may also need to look outside your current lender for a loan. While some lenders, like Bank of America, will refinance an existing loan theyve given you, other lenders wont.
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