What is Auto Loan Refinancing and Why Do It?
Auto loan refinancing, the act of taking out a new loan on an already financed vehicle, has become popular among many car owners. But why do some people decide they want to refinance their vehicles?
There are a number of reasons why people take the refinancing route. Here are a few:
Improved credit rating. Some decide they want to take out a new loan on their vehicle because their credit has improved since purchasing the car. As a result of this improved score, they can qualify for a lower interest rate and thus want to refinance the car to take advantage of lower monthly payments.
Wanting to get rid of the dealership. Another reason that auto loan refinancing is appealing to many car owners is being able to remove the dealership from the equation. Often, working with the dealership means paying an unreasonable amount on the retail value of the vehicle. However, because the dealership offered rebates and rewards, it was hard to turn down working with them. But once time has passed, some decide they want to buy out the loan and begin paying an impartial financial institution. For this reason, some decide to refinance.
Getting out of a lease. Some individuals lease their vehicles only to realize they would like to own them outright. In order to do this, the individual can take out a loan with a financial institution that will allow them to write a check for the remaining balance on the car. Once the car is paid for, the individual then makes the remaining payments to this financial institution.
Auto loan refinancing can be a very liberating experience for vehicle owners who want to improve their payment experience. However, just as when applying for the original loan, be sure to read all of the fine print and confirm that the interest rate you’re quoted is correct based on your credit score. If all checks out, you can take on your new loan benefiting from all of the perks you already have.
