As the prices of automobiles continue to increase, most buyers today consider it inevitable they will have to take out a loan to purchase their dream vehicle. However, the downside of a car loan is often the amount of the monthly payment as well as the length of the loan. Because many of today’s loans extend up to eight years, at some point it may make sense to consider a car refinance loan. While this sounds like a good idea to many, others wonder if it is worth the time it will take to gather the information and work out the details. For those who do so, the work usually results in saving thousands of dollars on the loan.
However, if you’re going to refinance your car loan you need to do it early on. Since most car loans are set up to have the interest paid off before the principal, a car refinance loan won’t do you much good it the loan is close to being paid off. Also, the amount of the loan can also be a determining factor in whether refinancing is a viable option. For many companies, loans that are less than $8,000 will not qualify for refinancing.
Just as you did when seeking the original car loan, you need to look at many different lenders to get the best available rates. However, one key point to remember is the new loan cannot be with the same lender that gave you the original loan. So no matter how much you may have liked the original lender, you’ll have to look elsewhere for the refinancing loan.
The type of loan you had originally will also play a factor in how much time and effort you’ll need to put into the new loan. If the original loan was in your name only, you’ve got nothing to worry about. However, if you had a joint loan with another person, you’ll need to know the exact names that were on the original loan, because these same names will need to also be on the new loan. You’ll also need the VIN, or vehicle identification number, from your vehicle in order to complete the paperwork for the refinancing.
If you’re determined to refinance, you’ll also need to get a current appraisal of your car’s value. It’s important to remember most lenders will not refinance a vehicle if the loan is more than the value of the car, so this may present a problem if your car’s value has experienced a major drop in value. If your car still has enough value to make refinancing worth the time and effort, be sure to get refinancing quotes from as many different lenders as possible. Comparing the annual percentage rate (APR) from the offers will help you decide which one may be the best option for you.
So if you’ve considered all the steps you’ll need to take and are sure you and your car meet the criteria, and then seeking a car refinance loan may be for you. If your original car loan is causing you distress due to its large monthly payments and extended length, taking the time necessary to pursue refinancing is probably an excellent idea. By doing your homework, gathering the necessary information and being willing to get quotes from a number of different lenders, it’s very possible to find yourself with a new car refinancing loan with payments that will fit much better into your monthly budget.
Michelle is a writer who works for Valley Auto Loans, a leading auto and cars finance provider in USA fully dedicated to help its customers acquire refinancing as well as new or used car loans.