Most people know that you can refinance your mortgage for better rates. What many don’t realize is that you can refinance your car for exactly the same reasons and get the same benefits.
Refinancing your car can lower your payments, get a better rate and get you out from under the dealer.
How does it work to refinance a car?
Auto refinancing works much like refinancing your home. You fill out an application with a lender including the year and model of your car. The lender will check your credit report and will estimate the current value of the car.
When can you refinance your car?
There’s no rule for how long you have to wait to refinance your car but there are some factors to watch for when to refinance.
1. You owe less than the Blue Book value of the car 2. Your credit score has improved since you took out the original loan 3. You need to lower your car payments to make ends meet
Why should you refinance your car?
1. Lower your car payments 2. Lower your interest rate 3. Get away from Buy-Here-Pay-Here loan sharks 4. Cash out money
How do you refinance your car?
Check your credit report to make sure there are no errors and try paying down any credit card debt. Once you’re ready to apply for a car refinancing loan, the actual application usually takes less than five minutes.
If approved, the lender will contact you to get a copy of your car’s title or the loan documents for what you still owe. Loan proceeds can be deposited in your account within a couple of days.
Potential problems with auto refinancing
If your credit score is so low that you’re not getting any loan offers at lower rates, try waiting a month or two to apply for a loan. Work on your credit score a little and keep up with your payments.