Taking advantage of auto loan refinancing is an attractive option for many consumers, since refinancing an auto loan allows you to pay a lower interest rate on your car loan, and may also speed up the amount of time it takes to pay off the full balance of your loan. But some question remains as to whether it is possible to refinance a used car the same way you would a newer model. Since cars depreciate faster, many people are concerned that this will mean their older cars are not eligible for financing. If your car is older, or is not worth as much, is it still going to qualify for refinancing with a bank or other financial institution?
The answer is that, in most cases, your lender will be open to refinancing a used car the same way they would extend you a loan to refinance a new car, as long as your credit is good and you don’t owe more on the car than it is worth. Many banks, credit unions and even credit card companies offer good rates on auto loan refinancing for used cars. Lenders will not ask for an appraisal on the car the way they would if you were applying for a home loan. When you apply for a home loan, the amount of the loan is based on the equity you have in your home. This is not the case with auto loan refinancing, which does not require an appraisal and is solely based on the amount you owe on the car in question.
Many lenders do have a minimum amount for a used car refinancing loan, below which it is not worth it to them to extend a loan. The cut off is typically for cars that are worth less than $7500. But even so, this is not a hard and fast rule and you should check with your lender to see if they will extend you a loan for used car refinancing.