Auto refinance is a way of saving money by using a new car loan with a lower interest rate to pay off your old car loan. Home refinance is fairly well known today, but a lot of people do not realise that they can do exactly the same thing with their car loan. Some lenders are willing to refinance car loans issued by them selves, but they are not very common. In most situations you will instead have to contact another lender and ask them about car refinance. Always contact several lenders and don’t hesitate to negotiate their first offers. The car refinance market is highly competitive and you can save a lot of money by looking around and comparing different offers before you make a decision.
If you have a bad credit score, you might still be able to find a lender willing to offer you a beneficial car refinance solution. You might not get the interest rate down as far as you would with an excellent credit score, but each point under your current interest will still save you money. Sometimes car dealers tell customers with poor credit scores that the credit company connected to the car dealer is their only chance of getting a car loan, but this is rarely true. If you have bought the lie and got stuck with a sky high interest rate on your car loan, you should definitely start looking around for a beneficial car refinance solution since this could very well save you loads of money each month.
When it comes to appraisal, there is a significant difference between real estate refinance and car refinance. A lender offering real estate refinance will typically base the offer on the equity of your real estate, and an appraisal is therefore necessary in order to find out the market value of your house. When it comes to car refinance it is however much more common for lenders to focus on how much you need to pay off on your current car loan and not on the market value of your car. Companies offering car refinance solutions will therefore rarely ask for any appraisal.
Car refinance will often result in a lower monthly car loan payment, but before you start spending that money on other things you should sit down and take a look at your current financial situation. If you continue to make the same monthly payment as before, you will pay of your car loan much quicker and this will in turn save you money since you will pay less interest. Keep in mind that for each month that you pay more than the absolute minimum, the principal will be reduced with that amount, and since interest is calculated based on the principal you will start saving money immediately. This will also mean that when you make your next monthly payment, and even larger amount of it will be used to decrease the principal since the amount needed to pay off interest will be lower. Your financial situation will definitely be moving in an upward spiral. Sticking to your old monthly payment after having done a car refinance is therefore an excellent choice in most situations. After all, if you could afford to pay that sum last month, why not this month?