An auto refinance is a loan taken to pay off the existing auto loan. It involves transferring the official ownership of your car from one creditor to another. The new lender pay off the older one and you start paying him at different terms than those of the first contract.
People take a refinance for different purposes. However the underlying aim is to have favorable terms due to mostly a change in the prevailing market conditions. Among the reasons for an auto loan refinance is a decrease in the interest rates, desire to either shorten the period of monthly installments or lengthen them.
If you desire to pay lower monthly installments, this will necessitate you prolong the period of payment hence the need to refinance. The market interest rates may have decreased than when you took an auto loan or you may have sported a better deal. A rise in the credit points definitely means lower rates. Under any of these circumstances one should take a refinance.
The process of refinancing is fairly simple, after approval following application of refinancing, one gets the check from the new lender and uses it to clear the old debt. There are a few costs in refinancing which include; a lien holder fee ranging from $5-$10, state re-registration fees ranging from $5-$75.one should ensure his agreement does not have any prepayment penalties which may be costly.
With such possibilities, an auto loan refinance should be considered by any one keen to save.
When people think about an auto loan, many associate it with high interest rates which make you pay much more than is required for a vehicle. However, it is possible to pay less on a car than most people even if you apply for a car loan. Some of the things you can do include the following.
Paying less on a car loan starts with finding a well priced car. Whether you want to buy a new or used car, it is possible to find great deals offered by car dealers. Find the best offer on the car of your choice and use this as the base of the loan you want to apply for.
Once you have found your car and its price, its now time to find the best auto loan lender. Look at the lenders terms on the car loan. Such terms include interest rates, payment periods, penalties on defaulting and incentives to pay up faster among others. It is necessary that you find a lender who suits your borrowing needs if you want to pay less than others.
Think about fixing your credit history before applying for the loan. Bad credit rating usually attracts high interest rates. Consider the advantages and disadvantages of fixing your credit rating before or after applying for the auto loan. You will find in most cases that fixing it early will enable you pay less on your car loan.
If you want to pay less on you auto loan than others, you have to consider making a down payment on the loan. The reason for this is that the balance that remains after down payment is what is subject to interest charges. In addition, down payments can enable you get lower interest rates on your loan.
There are probably a few hundred auto loan companies in America alone and all of them seem to be offering something cheap, reliable and flexible. The real truth of the matter is that in the majority of cases this is not really what is happening. A good majority of companies that specialize in giving people an auto loan are interested in making a profit which can only be made if borrowers pay back. However they know that most borrowers are in a hurry to get an auto loan and show they slap on high interest rates and hidden charges all the while making everything look great via their websites and advertisements.
The best way to go about finding and getting a good auto loan is to take things one step at a time and never take the lender’s word for anything. The only way you are going to find out anything is if you browse through the lender’s website and especially at the terms and agreements section or speak to someone over the phone. Your job will be to find out if they are hidden charges and extra costs associated with these so called cheap loans. You will also need to compare what one company is offering with other similar companies if you really want to test if you are indeed getting a good deal.
When comparison shopping for an auto loan you also need to take into consideration the lender’s repayment plans and other similar policies. If you have average credit or below average credit you can find out what they are offering to people such as you by getting a quote from them. You can also chose to enter in your own credit information on which the quote will be based on instead of referring to the credit bureau; the reason behind this is simple as too many hits to the credit bureau within a fourteen day period can cause your credit to take a hit.
You should only sign up for an auto loan once you know exactly what you are getting and what it will cost you. You should also know how much more you will end up paying once you have finally paid off the auto loan which should tell you exactly how much the loan cost you.
If you were thinking about getting some extra money to pay for your car why not just go to your friends and family for an auto finance loan? If you know someone who has some cash to spare it would be more convenient to ask for help getting a car, and you can ask for a decent interest rate. You can have confidence in the person you trust and the only downside, here is that if you fail to do your part of the deal which is to pay back on the due date. Especially if it’s your friends who you owe, which could put problems in a relationship, and you don’t want some nasty rumor to spread about you being a thief. Auto finance sources have their pros and cons; while this method may be the most convenient it can also give you a really bad impression.
If you think about money the next thing that comes to your mind is a bank and banks also have auto finance deals that you could use to get a car. Banks are a lot more direct when applying for a loan, they put the entire thing you need to know about the deal upfront if you are qualified to get a loan. Also banks usually add free life insurance and disability insurance to sweeten the deal, and you can pick the rate which is suitable to your monthly income.
When applying for auto loan, there are various options; from getting the loan directly from the dealer to finding a lender who suits your needs online. Below are five different options; weigh your options and make a decision for yourself.
From the Dealer:
This is one of the popular ways for getting auto loan; contacting the dealer who wants to sell the car to you. The positive of this option is that it is possible to have a 0% financing at your own favorable terms. Although what one needs to understand is that generally many of us do not qualify for the financing of this kind and a lot of us end up paying higher interest amounts.
Finding online auto loan is one option that is getting popular. This method is one of the most popular, secure and easiest way to get your auto loan; also it provides maximum control. Once your finance is approved online, the company then provides you with a blank check which you would take to your dealer; you have more chances of negotiating as you would be buying the car on cash payment.
Although in the present economy situation this might not be a good option but as we all have savings accounts with a bank right across the street, we must not forget even these banks provide loans. If you have a contact at the loan department of the bank, do try this option as they give charge low rate of interest.
Most of the time credit unions provide the cheapest auto loan. They pass the savings to their members as they have low cost of the fund. These unions charge a very small fee for you to be a part of it, so find a union around your area.
Buy Here Pay Here:
The buy here pay here dealer is the costliest way to get auto loan. These dealers make you pay a huge down payment and then ask for payments to be made weekly or in some cases bi-weekly. The interest rates are very high.
Almost everyone has heard that the credit score and the salary are the two most important requirements on which the auto loan approvals are based. However, there are some other obligations which the applicant has to fulfill to ensure that the approval process goes on without any hindrances. The basic obligation is to have a regular job which pays good enough money to see off the loan.
Another requirement is that the applicant should be at least over eighteen years of age (legal adult). Moreover, the applicant should be able to apply and pay for his/her insurance. The applicant shouldn’t have any intention of changing his/her nationality (and the country) during the term of the loan. These requirements are more important for the insurance than the loan but these are necessary nonetheless. Many lenders approve loans in which the insurance costs are also included and being unable to apply for insurance might result in rejection.
The applicant might have to provide the previous year’s tax forms for auto loan approval. This requirement is there to verify the income of the borrower. Self employed applicants have to provide the tax forms for the last two years. Hence, ensuring the fulfillment of aforementioned citizenship and tax requirements would provide the lender with good enough reasons to approve the auto loan.
To facilitate borrowers to finance their car purchase auto finance providers came up with bad credit auto loans. People with bad credit ratings were then able to apply for auto loans without worrying about their bad credit scores.
The scheme seemed to worked out well as it proved to be beneficial for both the borrowers and money lender as well. However, the biggest drawback of bad credit auto loan is the high interest rate and because of that sometimes borrowers started finding themselves incapable of coping with the bulky monthly installments that they had to pay without fail. Because of the high risk involved in bad credit auto loans it was necessary for the auto finance providers to provide loan at high rate of interest.
Now because of the high interest rate of the bad credit auto loans the bad credit raters have to think a lot before applying for it as it may worsen their credit position. To their rescue comes herein “co-signer”, a person who agrees to pay on behalf of the borrower in case the borrower defaults. If the borrower is able to bring such a co-signer a bad credit auto loan can be easily obtained at a low interest rate; provided that the co-signer has a good credit condition.
The co-signer’s credit worthiness will be seen by the auto finance provider just the way a borrower’s credit scores are seen to determine is the loan can be approved or not. Having a reliable co-signer can be a great help for people with bad credit ratings. Once the loan is obtained with the back up of a co-signer the borrower can carry on with the finance management and improve their credit scores as well.
There are a lot of ways that you can apply for an auto loan, but before you make your decision make sure that you realize all your obligations and also read some information on how to choose the best auto loan available on the market.
On most of the websites that are offering such information you will notice that the main thing that you should be concerned about is your credit score. Most of the people are aware of the benefits that they will be able to get if they have a good credit score, but there are many who do not realize all the consequences of a bad credit score.
The main thing that you will get with a bad credit score is higher interest rates for the auto loan. The reason is simple – all the lenders will consider you an unreliable customer and therefore they will set higher interest rates as a security. Furthermore, the monthly payments will be higher for the people who have a bad credit score, so make sure that you see how you can improve it. There are a lot of experts that are offering their services for free and before you apply for an auto loan, make sure that you use that option.
Simply estimating your monthly payments and ensuring that they fit in your budget is one sure way to ensure that your bad credit auto loan will be convenient to you. A convenient payment plan is beneficial to your overall financial plan. Before signing the dotted lines make sure every detail in the deal is right and you stand to benefit.
Most providers of this finance will have reduced interest rates. But also ensure there are no hidden charges. Also confirm with the bad credit auto loan provider to ensure he does not charge pre- payment penalties. This is to protect you against paying extra amounts in case you default with a valid reason. Otherwise you must try as much as possible to repay the loan on time. This builds your credit history and increases your credit scores so that the next time you seek finance you will be able to obtain car credit with lower rates.
Make sure to raise a good sum of down payment as this will lower the amount of installments you will have to pay. Above all ensure you have a flexible payment plan that will accommodate contingencies. These you have to take into account when negotiating for the rates and installments of the bad credit auto loan. Lower interest translates into lower installments thus less financial burden. Ensure that the installments are well spread. Not too squeezed or too stretched. This will help you not be constrained in other personal spending.
Always ensure that when you take a bad credit auto loan it is a decision you have planned for. Maximum benefits accrue to you only when you are able to get a loan you can afford and service it on time. These is a proven way to enjoy the luxury of a car cheaply.
If you asked all your friends, chances are they all think they are experts when it comes to the car buying process. They can all give you advice on how they made mistakes which cost them money. Chances every one of them will tell you they can do a better job next time.
There are a couple of things you should consider prior to starting the process of buying a new or used car:
A. Take your time, if you have bought a car before then think back on that process and see if you don’t think you made mistakes which ultimately cost you money. Even consider making a list since this is the second most expensive purchase most people ever make it’s important to be thorough.
B. Remember you are basically preparing for battle against the pros. Most car sales people sell anywhere from 3-6 cars a week, whereas most consumers buy a new or used car only about every 2-5 years, so who do you think has the edge?
Here’s an easy car buying checklist that will even the playing field:
Our easy to follow checklist will help you prepare before you begin, it will help you to stay in control during and it will also help you to make sure that everything is done properly after the car deal is done.
1. Narrow Your Choices with Research
First you must decide if you want to buy a new or used car. Most often budgets and car payments are what makes the final decision. There are some great free tools available to you like an auto loan calculator and websites that can help you determine the value of the car if it’s used and the dealer invoice price if it’s new. Frankly today’s credit crunch has made the choice of buying a used car even easier. The value is holding far better than a new car.
2. Get Pre-Approved for Your Auto Loan Online
If you take the time and get pre-approved for your auto loan online, you will save countless hours and eliminate the stress of finding the best auto financing for your needs. If you experienced some past credit difficulties and happen to have bad credit there’s absolutely no better way to get approved than with a free online auto loan application offered by many excellent auto loan providers. These lenders provide fast easy auto financing for bad credit auto loans, new or used car loans and bad credit car loan financing. Many people who could in the past get approved for a car loan easily have found that the rules have changed. In early 2008 a credit score of 650 or higher would qualify you for just about any program at any bank or lender. Since the bad credit loan crunch, you can’t qualify for the lowest car loan rates unless your credit score is above 700 which is less than 2% of the population.
The bad credit auto loan lenders use the Internet to allow you to do the shopping for the best car loan rates regardless of your credit situation. We would advise you to know what your credit score is prior to beginning your search for the best auto loan. There are some websites that offer a free credit report, take advantage of it.
You can get a free no obligation car loan quote simply by finding a website that you feel addresses your needs.
3. Do You Have a Trade-In? Get it Ready!
If you have a trade-in there’s some things you should know to help you get the most money for it, which ultimately means you are going to pay less for the new car you are about to buy.
Make sure your trade-in is clean. Try to get an air freshener that smells like a new car. Don’t leave it in the car when you go to the dealership of course. Used car managers are typically the ones who appraise your trade-in, so if it appears the car has been taken good care of including making sure you get the oil changed before you go, you are more likely to get a better price for your trade. It’s helpful to also check some of the free websites like Black Book or Kelly Blue Book as they will give you the trade in value of your car free of charge.
4. Know the Price Range
Just as important and knowing the realistic value of your trade is knowing what a reasonable price for the new car is. If it’s a new car then you find the invoice price from a number of websites including Edmunds. In the past there were certain models of new cars and trucks that mandated a premium or in some cases; you may have to pay more than the sticker price. If there’s some good news about the bad credit loan situation, it’s that there are no longer any vehicles that require you to pay sticker price. If it’s a used car then you want to check the average retail price of the vehicle. You can also check local classifieds for used cars in your market and see what people are asking for them. Keep in mind they all expect to negotiate to a lower price. We would always suggest buying a used car from a local dealer rather than a private party and the reasoning is quite simple. The dealer has a lot to lose if he doesn’t guaranty the car; the private party could care less and will race to the bank to cash your check. Short and simple: don’t buy someone else’s problems.
5. The Dealership Process
Sometimes the excitement of buying that new car clouds your thinking process and that only means one thing: it will cost you more than it should. You should take your time, it’s a huge investment. Here are a few quick suggestions for making the purchasing of your new or used a little more pleasant:
a) You can negotiate just about everything including: price of the car you are buying, the value of your trade, interest rates especially if you have good credit and always remember to ask about the warranty on the car you are buying. There will be some kind of warranty included and most likely the dealer will have an extended warranty package available for purchase as well.
b) If you have taken advantage of using an auto loan calculator, you already have a good idea of how much your payments will be. Most often when you are presented payments they already include a higher interest rate, extended warranty and other items dealers call aftermarket like a paint sealant. Don’t panic it’s only a starting point and since you are already informed, you can be in control of the situation. The last thing that dealer wants it you leaving without buying a car.
c) You are the buyer; the dealer has to meet your terms. Don’t allow anyone to pressure you into something you already know isn’t right. If you want to see someone change their attitude, pretend you are upset and act like you are going to leave. You will be amazed how often you end up getting something extra that you weren’t already offered.
d) Don’t let buying a new car stress you out. You are already prepared. Dealers today know that people aren’t standing in line to buy cars so it’s never been a better time to do so. You are more likely to actually enjoy and have fun buying this car than ever before. Economic has put consumers in control like never before, so enjoy and take advantage as you may never have this power again.
e) Even though the old days of the car business are now history, it’s still important to follow some basics: Anything someone told you about your car, anything that was promised during the negotiation process or any warranties or guarantees that were offered, you should insist that everything is in writing and part of your buyer’s order. Don’t leave the dealership and certainly don’t sign all the car loan documents if anything is left out.
6. What You Should Do After You Have Taken Delivery
Even the dealership will tell you they will contact your insurance company, it’s still your responsibility. In most states you have 30 days to do so but don’t delay, we suggest doing it the next business day just to be safe. Make sure you keep your copy of the loan documents and buyers order in a safe place especially if there are items you need to return to the dealership for. The reason for this is simply the person you bought the car from may no longer be there. That’s the reason we always want everything in writing.
If you had a good experience let people know. If you had a bad experience you probably got excited and didn’t follow the checklist but you need to let others know so they won’t make similar mistakes. There are many automotive forums and blogs out there that you can let everyone know your car buying experience. The more informed we all are the more money we can save the next time.