How Do I Refinance My Car Loan?
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An auto loan is a secured installment loan. Borrowers make a predetermined number of payments on the loan until it is paid off. Each time a payment is made, the borrower builds equity in the vehicle. At any point during the loan repayment process, the borrower is allowed to refinance the loan. How is this done?
Evaluate the Current Terms Before You Refinance Your Car Loan
The first step is to evaluate the current terms of your loan. You then must decide if you could benefit from a lower interest rate or the ability to make a lower payment each month. Once you decide that you could find better loan terms than the terms that you currently have, you can then start shopping for a new auto loan. Refinancing an auto loan is often a good idea if your credit score has improved since you got the loan, you want to pay off the loan in a larger number of payments or you are looking to consolidate your debt.
Where Can You Find a New Auto Loan?
There are a variety of lenders that you can choose from when you decide to refinance your loan. You can look at online lenders, visit a local bank or credit union or refinance with the same lender that you currently have. If you obtained a loan from your dealer, your dealer may be willing to renegotiate the terms of your loan.
Apply for a New Loan
When you find loan terms from a lender that you like, it is time to apply for a new loan. The lender will then run a credit check and take other steps to determine if you are a good credit risk for the loan that you want. The lender will then contact you within a few hours to to approve or deny your application. In some cases, your lender may want more information before approving the loan.
What Happens When the Loan Is Approved?
If your loan is approved, your new lender will pay off your old loan in full. The lien is then transferred from the old lender to your current lender. You then start making payments to you new lender on the agreed upon start date of the new loan. In many cases, you will be given 45 days to make your first payment. Make sure to check your credit report to see if your old lender has marked your account paid and closed. If it isn’t call the creditor as well as the credit agencies to ensure that you aren’t penalized for inaccurate information regarding your loan.Refinancing a car loan is similar to getting the first loan on your car. You find a lender that you like, apply for a loan at terms that are agreeable to you and start making payments on the new loan once the loan is approved. */]]> 0 comments