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.