How Does a Refinance Auto Loan Work?
When it comes to refinancing auto loans, many consumers are surprised to find out that it is possible for them to qualify for refinancing on a car.When most people hear the word “refinance,” they usually assume it refers only to refinancing a mortgage. They are often pleasantly surprised that they can take advantage of low interest rates and speed up the time it takes to repay their auto loan by refinancing their car, as well.
How does auto refinancing work? If you already understand how to refinance your home, then that should give you a pretty good idea of how refinancing an auto loan works, too. Basically, the process of refinancing an auto loan is pretty much the same: you apply for a new loan from a lender who will furnish you with a lower interest rate than you are getting on your current auto loan. If you are approved for the loan, you will then use the money from the new lower interest rate loan to pay off your current auto loan with the high interest rate.
There are some differences between refinancing your home and refinancing your auto loan. The good news is, you will not have to get an appraisal on your auto the way you would for your house, where the value of the loan is based on the equity in your home. The amount you get for an auto refinance loan is entirely based on how much it will take to pay off the auto loan you already have. However, the bank will only finance up to the amount that your car is worth. If you owe more on the car than the Kelly Blue Book value, you will need to pay down your loan before you can qualify for auto loan refinancing.
Many banks and credit unions, and even credit card companies, offer good terms on auto loan refinancing, and you can shop online for the best rates on auto loan refinancing. Compare different lenders before choosing the best auto loan refinancing rate for you.
