How to Refinance Your Car

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Even with poor credit.


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, - December 4, 2013

Learning how to refinance your car can save you thousands of dollars. Find the best lenders for refinancing a car, and learn how car refinancing works.

If you're not happy with the loan rate on your car, you might be wondering how to refinance your car. Refinancing your car could save you thousands of dollars.

Your Original Rate

When you got your car loan, you might not have been happy with the terms of the loan. Many times people get poor loan rates from the dealer they purchased the car from. This is how the dealerships really make their money. Even though you've already purchased the car, you can still get a loan you are happy with and it only takes a few days.

Your Credit Score

The most important thing you need do before you refinance a loan is to get your credit report. Have this on you when you are applying for a new loan. Don't trust the free annual report that the credit bureaus offer. You need to purchase your credit reports to make sure it's accurate.

Once you have your credit reports, you'll be aware of what the lender is basing their decision on. You might be able to get a cheaper rate by pointing out that your credit score is worth more than what they are offering. If you have a score under 600, it won't be worth it to do the work of applying. You'll need to raise your credit score before you try to refinance.

See what kind of interest rates you can get >>

How it Works

You probably won't be able to refinance the loan with your original lender. Talk to other lenders to get refinancing. Often, lenders are so competitive for the loan, they will offer you a much better APR.

For example, if you're paying 20 percent, you could drop that to 8 percent. Then the new lender pays off your old one, and you'll start making payments to the new lender. Now that you have a new rate, you can pay off your car loan much faster.

When refinancing, you basically pay off your current car loan with a new car loan from a new lender that has a lower interest rate. The refinanced auto loan will make your monthly car payment lower because your interest rate can be drastically lower. This allows you to pay off the car much more quickly than you otherwise would have.

If you had poor credit when you got your car, you're recent timely payments may have raised your credit rating.

Important Information

When you are filling out the loan applications, make sure that the loan request is in the same name as the original loan. If you don't do this, the possible lender won't be able to find your current loan. Also make sure that you have your account when applying. If you spell the name wrong or put down your account number incorrectly, you will get denied.

Make sure that all of your vehicle info is correct so the lender can make sure the car meets the Loan to Value ratio. You need the year, model and VIN number.

You can't refinance for more than the car is worth. So it is important to make sure you know what your car is worth before entering the process.

Find your auto loan refinancing rates now >>

The 3 Best Car Refinance Lenders

Seeking out various lenders and comparing their services is the first step towards attaining that loan. Below are three lenders you should consider when refinancing your loan as they are known for their great rates and term options in refinancing loans.

  • E-Loan – E-Loan is a nationwide lending company that has dedicated itself to providing simple lending products for its customers. They offer access to several different nationally recognized lending partners which provide consolidation and refinance loans for vehicles. A great advantage in using E-loan is that you get several offers from different lenders, which makes it easy to compare rates. Additionally, if many lenders on E-loan give you similar offers, you can be assured that you will get the same basic offer no matter which lender you choose. This saves you a great deal of search time and makes E-loan a great resource to consider.
  • Capital One – Capital One was established in 1995 and offers a globally diversified collection of services. It is a large bank that provides millions of loans, so you could get a decent rate, since they can mitigate their losses because of the high volumes of loans they provide. Capital One is a considerable option not only because of its size and reputation, but also because of the lower refinance interest rates it can provide to both new and used car owners.
  • Driver's Select – Driver's Select strives to offer the most financing programs available for people who have credit issues. Driver's Select offers consolidation loans, low refinance loan monthly payments, extended loan terms and competitive interest rates, even for people with less than perfect credit in some circumstances. This might be the right program for you if your credit is poor and you have the ability to pay the loan off in a short period of time.

Car Refinancing Online

One of the advantages of refinancing online is the ability to view multiple offers at once. With prevailing refinancing rates at or below 6 percent for loans of 60 months or less, you have the ability online to match the loan interest rates that are at or below the published rates. You also have the ability to search multiple sites at once and compare their information before making your loan decision.

Using an Online Loan Calculator

Most companies make it easy to calculate the impact of a refinance with a loan calculator. The calculator will ask for information concerning the remaining loan balance, old interest rate, any fees or charges and the new interest rate that is being offered. It can show you the cost savings of your refinance.

Online Applications

You have access to online applications that can be submitted instantly and in many cases, a decision can be made on the spot. This means you can perform a search, compare multiple offers, select the one best for you, apply and get approved in a fast and easy way.

Exercise caution before accepting any loan agreement that promises easy terms. Ask questions if there are terms and conditions that you do not understand or are not made clear. Checking the fine print and understanding the agreement helps protect your interests and ensure that you are in the type of refinance arrangement that will be the most beneficial to you.


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