Refinance Your Car Loan?

With loan interest rates so low, many people have refinanced their homes, and saved hundreds of dollars. Another way to save could be to refinance your car. It won’t work for everyone, but if you bought a car with a high interest loan, it may be worth your while to look into getting a better rate.

Cars depreciate rapidly, and therefore don’t hold their value as long as homes. However, if your current car is still worth more than the amount owed, check with your lien holder to see if you are a good candidate for refinancing. The fees for refinancing automobiles aren’t nearly as high as those for home mortgages, so you may be pleasantly surprised at the savings to be had.

How to Refinance a Car Loan?

If you feel that you are paying too much interest on your car loan, maybe it would be smart to refinance. You might be able to take advantage of lower loan rates to reduce your monthly payment and reduce the total you will pay for the car. It takes a little work. If you owe at least $7,500 and have longer than two years remaining, it might be a good thing to refinance. If rates have dropped as little as 1 percent, you might profit from refinancing.

If you can get refinancing, then the new lender will pay off your old loan, and you will start with a new payment schedule.

The best place to start would be your current lender, but there are lots of companies who make their business refinancing car loans for people like you. If the current lender will refinance, that might be the quickest and easiest way. If you want to get a new lender, compare rates for several companies to get an idea of the cost.

Remember, there may be some upfront costs associated with this loan, but don’t pay fees for an appraisal, loan application or credit check. When you have a good looking proposal from a lender, add up the total costs over the length of the loan to see how much you are really paying. Then compare it to the total cost of your current loan. Are you coming out ahead?

How Do I Get a Mortgage?

There are lots of companies, banks, etc. who make their living by getting you a mortgage. A good place to start would be your local bank. Ask to see a lending officer or mortgage specialist. A face-to-face meeting would be the best way to get your questions answered. He will probably give you a multipage mortgage application in which you will have to reveal your financial situation and all the details of the house you intend to buy. You may also have to pay a mortgage application fee when you turn in the application.

Then you may wish to call around to other banks and mortgage companies to find out their interest rates and closing costs. When you have picked out the people you want to work with, fill out their application and wait for a response.

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Can You File For Bankruptcy on Student Loans?

Not really, since student loans are not usually discharged in bankruptcy. It is difficult to do so and is only possible if you can show that repayment of the loan “will impose an undue hardship on you and your dependents.” You will probably need a lawyer and you must file a petition (called an adversary proceeding) to get a determination. Generally, student loans are not forgiven with a bankruptcy.

What is Auto Refinancing?

Auto refinancing is when you take out a new car loan to replace an old one. If someone is stuck in a high interest car loan, he might want to refinance in order to get a lower rate. Or if someone wants to lower his monthly payments, he might refinance for a longer time period. The new loan is used to pay off the original loan, and then the borrower proceeds to pay off the new loan in monthly installments. You get charged a small fee by the lender, and there isn’t much paperwork.

What is Tier 1 Credit in Auto Financing?

Tier 1 is a high credit rating for the purposes of auto financing. When different companies rate you for an auto loan, they use a series of tiers, maybe eight different levels. Tier 1 is the best level and it goes down from there, although some have Tier 1+. People at Tier 1 or 1+ pay the lowest interest rates on car loans. People in the lower tiers pay more, as much as three times higher interest rates.

Your tier level is based on several factors, but your FICO credit score is important with a score of 720 or higher helping to qualify you for Tier 1 financing. They might also consider income, past auto purchases and payment history.

How Do I Refinance My Car Loan?

A car refinance loan is one in which a new lender will loan you money to pay off your original car loan. You then pay off the new loan over time. It makes sense to do this if loan interest rates have fallen and you currently have a high-interest car loan.

Any lending institution will help you, such as banks, credit unions, etc. and there are numerous websites offering to refinance your car. If you want to pay less interest over the life of the loan, then keep it for a short term. If you want to lower your monthly payments, then lengthen the term of the loan.