Apply For A Refinance Loan
Loan transfers are done by having the recipient of the transfer refinance the vehicle and sign their name to the new loan. The credit of the recipient is mainly what influences the rates of the loans available.
This might not be of importance to you, since you won’t be responsible for paying the new interest rate, but your transfer partner should still have good credit if possible. This is especially true for both of your sakes if you plan on refinancing once more and buying the car back at a later date.
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Does Refinancing My Loan Affect The Aftermarket Product I Purchased
Refinancing your loan may affect aftermarket products, but it depends on the product you purchased. Review the terms in the contract to understand whether refinancing your vehicle will affect coverage. While most products are generally not affected, Guaranteed Asset Protection coverage typically ends when the loan is refinanced or paid off.
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What Are Aftermarket Products
Aftermarket products are optional products, services, or insurance that may be purchased when you buy your vehicle. They may cover unforeseen vehicle repair needs or assist with loan payments.
Common examples include:
- Guaranteed Asset Protection pays all or a portion of the loan balance after the payment of a total loss insurance claim.
- Service contracts provide coverage in the event that a major mechanical component of the vehicle, such as engine, transmission, heating/cooling system, seals, gaskets, and fuel system, need repair. The coverage typically lasts for a specific period of time or vehicle mileage.
- Anti-theft protection includes devices or services, such as tracking, that make the vehicle more difficult to steal or easier to recover if it is stolen.
- Maintenance packages are prepaid plans that typically cover scheduled maintenance, such as oil changes, on the vehicle.
- pays off all or some of your loan if you pass away.
- assists with making your loan payments if you become unable to do so due to disability.
Vehicles To Be Launched By Kia Motors In India Including Sp Concept
South Korean carmaker, Kia Motors is all set for its entry into the Indian market with its 4 car models which will include the SP concept-based SUV. With the introduction of these 4 models, Kia Motors aims to bring more business to India and make it a global hub for manufacturing. The carmaker will target automotive suppliers of Tier I and Tier II cities which will aid the company to create cost-effective but superior quality products.
Kia Motors is a sister-concern of Hyundai and it intends to manufacture/assemble its vehicles in India. The pattern of the product launch is at the moment being worked upon. Meanwhile, the carmaker is looking for suppliers in India who can serve its vendors in South Korea. Kia Motors have set up a manufacturing plant in Andhra Pradesh where production will begin from August 2019.
6 June 2018
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Applying For An Auto Refinance Loan
If refinancing still seems to make sense after running your calculations, it’s time to dig into all of the details.
Question the banks that you’re considering about any fees that you’ll be expected to pay. A small fee to transfer the title and re-register the vehicle is to be expected, but some banks may also tack on a processing fee.
Also, ask if there is a pre-payment penalty built into the loan. If so, avoid itâit will penalize you for paying off your loan early.
Once you’ve compared all of your options, submit your loan application to the bank with the best deal.
Alternatives To Trading In Your Car
Try selling the car yourself first. You may be able to receive more money for your car if you do a private sale. This is not a complicated process, and you can use the money to pay towards any amount leftover on the loan. There are many websites for selling used cars available.
If you will still owe money on the car after you have sold it, you should contact your bank before selling it to inquire about transferring the loan to a personal loan, or work out an arrangement with them.
Once you sell the car, you will transfer the title over to the new owner by filling out the transfer of ownership portion on that is on the back of most vehicle titles.
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Why Does The Amount Of Interest I Pay Change Each Month
The amount of interest paid each month changes because the daily interest amount decreases as the principal balance decreases.
At the beginning of the loan, the principal balance is higher, and as a result, the daily interest amount is higher. As you start paying down your principal balance, the amount of interest you pay each month decreases.
Additionally, interest accrues daily, and the number of days between payments makes a difference. More days between payments results in more days of interest charges, and fewer days between payments results in fewer days of interest charges.
How Much Of My Monthly Payment Is Interest
With a simple interest loan, there is a daily interest charge and you will pay interest on the number of days between your payments.
ExampleIf the daily interest charge is $2.50, and it has been 30 days since your last payment was made, the interest due will be $75.00 . Lets use the same daily interest charge, but now say it has been 40 days since your last payment was made, the interest due will be $100.00 .
If you defer a monthly payment, this will extend the term of your loan, and the interest will continue to accrue until the next payment is made. The outstanding loan balance will continue to accrue interest until the loan is paid off.
The total interest paid over the term of your loan may be different from what is shown on your loan agreement. If you pay your loan early, the amount of interest will be less, and if you pay your loan late, the amount of interest will be more.
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Tips For Avoiding An Upside
Its best to avoid an upside-down car loan altogether whenever possible. Be diligent with research before you buy a car and understand all the costs of options, financing and taxes so you arent already upside down when you drive out the door.
For most people, that means accepting that you cant afford to purchase a new car. Instead, look for a late-model used car with low mileage. The original owner will have paid the price for depreciation in the first year, so the purchase price should be at least 20% off the original cost.
If you are still tempted to buy new, try using the 20-4-10 rule, which means 20% down payment no more than 4-year loan and the monthly car payment plus insurance cant be more than 10% of your gross income. If you cant make those numbers work, its time to go back to the used-car lot.
The following tips can help you avoid an upside-down auto loan:
Choose the shortest repayment plan you can afford. Shorter repayment plans mean lower interest rates and faster payoff. For example, borrowing $25,000 for three years at 6.93 interest would result in $2,764 in interest paid. The same deal over four years would cost $3,716 in interest and a five-year loan would be $4,715 in interest. Thats about $1,000 more each year for the same loan. The difference would be magnified even more if your credit score was under 650.
Make a down payment of at least 20% of the cars total cost. This equals the 20% depreciation on the car that happens when you leave the lot.
Can A Personal Car Loan Be Transferred To A Business Auto Loan
Personal auto loans and business auto loans are slightly different in structure. Business auto loans tend to be larger and encompass multiple vehicles. As a result, it is not common to transfer a personal loan directly to a business loan. However, you may be able to prepay your current loan and refinance the business loan to include the vehicle. You can carry out a direct transfer only if the business auto loan currently in place happens to be with the same lender as your personal loan. If no business loan is in place, you will be able to transfer if the business uses the same lender as you personally used.
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Preparing To Refinance A Car Loan
The person who plans on taking over the auto loan needs to qualify for refinancing. This means meeting the lenders basic income and credit requirements.
Different lenders have different qualifications, but they generally require a good credit score and a certain amount of minimum income enough to cover the monthly vehicle and insurance payments. Some lenders may ask for proof of income, too.
To help the new borrower better prepare for the refinancing process, make sure they do these three things:
How Can I Sell My Car Before I Pay Off My Loan
If you need to sell your financed car before the end of its loan term, you will generally have the following two options:
If you are able to dip into your savings and pay off your loan before listing your car for sale, you may find it easier to attract serious buyers as it will no longer be encumbered. This option can also make the sale transaction easier, as the buyer can simply make the payment directly to you.
If you are not in the position to be able to pay out the loan before selling your car, you could use the money you make from the sale to pay it off. Just ensure that you are transparent with potential buyers when selling a car thats under finance.
Many credit providers will allow you to process the transaction in the branch, so that the buyer can be present to witness the loan being paid off before ownership is transferred into their name.
If you sell the car for more than what is owing on the loan, you can expect to receive whats remaining once any fees have been covered. On the other hand, if you sell the car for less, youll be liable to pay the gap.
And if the buyer plans to use a car loan to buy the car, their credit provider should be able to communicate directly with your credit provider in order to work through the transaction process.
Personal Finance Editor
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Final Tips For Auto Loan Refinancing
Most banks will only refinance auto loans from other banks. Don’t be surprised if your current bank turns you down.
Avoid cash-out refinance offers .
They may be a good option for home mortgages, but they’re not the best when it comes to cars as they add to the length and cost of your loan. Cars lose value quickly, so a cash-out refinance is not likely to save you any money.
How To Return A Leased Vehicle
If you’ve leased the car, you’re in a somewhat different situation. Obviously, you can’t sell it.You can return the vehicle to the dealer, but if it’s before the lease expires, you’ll likely face some stiff early termination fees. Plus, you will still owe the balance remaining on the lease andâto add insult to injuryâalso lose the upfront money originally paid.
However, drivers who want out of their contract ahead of schedule can take heart: There are a few options that allow you to circumvent the usually harsh termination penalties. One frequently overlooked pathâand often the least expensive choiceâis to transfer the lease to someone else.
It works like this. Suppose you have two years left on a three-year lease. Whoever buys your lease agrees to make the remaining monthly payments. While some finance companies donât allow such transfers, the vast majority do. The trick is finding someone interested in taking the reins from you.
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Why Would You Want To Transfer A Car Loan
Whether it be unforeseen circumstances in your personal life or an economic setback, car loans can become significant financial burdens. While it may not always be your primary choice, there may be a situation that presents itself where transferring a car loan is in your best interest. Here are a few examples:
- You need to get out from under the monthly payment: If youre under significant financial stress, you might consider transferring your car loan to another person with better credit and a more stable income. Under these circumstances, the new loan holder might have a better ability to pay, preventing your credit score from taking a massive hit by defaulting on the loan. Perhaps you simply dont have the means to pay for the car loan in the foreseeable future. In this case, someone else could take on the loans financial burden until your income levels have been restored.
- You want to sell your vehicle: Contrary to popular belief, you can sometimes sell your car for a profit without fully paying the loan value. Under this circumstance, however, youll need to transfer the loan to the new owner unless they want to pay you for the loan amount before making the purchase. Your car has to be worth more than the remaining loan balance for this option even to exist. When selling your vehicle in this way, the vehicle owner will then take responsibility for the loan and its regular required payments.
Can I Transfer My Car Loan To Someone Else
While you probably didnt anticipate having to sell your car before the end of your loan term, plenty can change over the course of a few years. This might lead you to wonder whether you can transfer your car loan to another person.
While it is possible to sell your car when its still under finance, its unlikely that your credit provider will allow you to transfer your loan to someone else.
The reason for which is fairly simple. Banks and other lenders are required to comply with ASICs responsible lending conduct obligations, which state that credit licensees must not enter into a credit contract with a consumer if it is unsuitable for the consumer.
Before a lender approves a loan application, they will determine whether the borrow amount, interest rate, repayment costs, loan term, and other factors, are appropriate for the borrowers personal financial situation.
If the lender was to allow you to simply transfer your car loan into someone elses name, they would be failing to meet their obligation to carefully assess the individuals financial position and determine whether the loan would be suitable for them.
After all, the loan product thats best for your financial circumstances isnt necessarily going to be right for someone else.
Fortunately, there are other options.
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Out Of State Transfers
When youre transferring your vehicle title to someone who lives in the same state as you, the process is fairly easy. Both buyer and seller simply have to follow the states rules and regulations.
However, in cases where the buyer is located out of state, there are usually a few more hoops to jump through, such as providing and verifying your vehicle identification number . This is all done to prevent car theft and fraud, so while the process can be a bit tiring, remember that its there to protect you. When in doubt, always consult directly with your DMV office since laws vary from state to state.
With online transfers or other transfers in which you dont actually deal with the buyer or recipient face to face, you may need to contact the DMV in the buyer or recipients state of residence or go through a trusted third-party site that handles online vehicle title transfers.