Refinance A Car Loan- How To Refinance A Car

Auto Refinance Loan

Refinancing your auto loan may result in lower monthly payments. With auto refinancing, you have the opportunity to replace an existing loan of relatively higher monthly payments with a new loan which is more affordable.

Auto refinance also benefits borrowers who have an ongoing auto loan but happen to face difficulties like bad credit, a bankruptcy proceeding, or a cash crunch, and are currently unable to repay back the loan. Consider WowLoans for your auto refinancing needs!

Auto Refinance Loan
Auto Refinance Loan

Auto Refinancing Services

If you are wondering whether you can apply for auto refinancing in spite of having bad credit, then the answer is yes. You can apply for a refinancing loan and get better interest rates along with manageable monthly payments. Refinancing can save you money and help you repay the loan earlier.

Such actions could help you rebuild your credit as well. If your credit scores have already improved and you believe that you can get better terms on your auto loan, then it makes sense to consider working with an auto refinancing service.

 

What does Auto Refinance really mean?

Auto refinancing simply means that you borrow money via a new loan to pay off an existing car loan. You do so because the new loan will have more favorable terms than the existing one. In both cases, your vehicle will be used as collateral.

The new loan, also known as the refinanced loan, is a contract between the lender and the borrower. The terms that the two parties have to agree to include the interest rate, the tenure or duration of the loan, and the monthly payment amount.

Some features of the auto refinance loans are different from those of the existing loan. The terms and features of the refinanced loan are influenced by the financial situation and the ultimate goal of the borrower.

 

What are the requirements for Auto Refinancing?

If you are considering refinancing your auto loan, then here is what you will most likely need:

  •         Find a loan that has better terms and a lower rate than your existing auto loan. Without getting something better, there is no point in refinancing.
  •         Your vehicle details like model, make, year, mileage, and the VIN number.
  •         Your existing loan information such as lender name, account number, and the current outstanding balance.
  •         Proof of employment like a pay stub or a tax return which establishes your ability to repay back the loan.

In order to find the best possible loan offer, you will have to research and compare multiple options. Know the interest rate, loan tenure, and monthly payment amounts that are being offered. Find out whatever you can about auto loan refinancing and how it works.

Before you sign the dotted line, you need to know exactly what you are getting into. There is no going back after making the final decision. Plus, the more informed you are, the better the discussion that you can have with a refinancing service provider.

 

Some good reasons to go for auto refinance 

  • Low interest rates – This is one of the most popular reasons for refinancing. Lower interest rates mean that you will pay a lower interest component over and above the principal. Higher interest rates result in a more expensive overall purchase for the borrower.
  • Low monthly payments – Lower interest rates result in lower monthly payment amounts. This is another great reason to refinance. With lower monthly payments, you can manage your cash flow better as more money will be left for your personal use after deducting money towards the loan repayment.
  • Longer tenure – Longer loan tenure will mean lower monthly payments because you now have a longer time to pay back the loan. However, a longer tenure also means you making payments for a longer duration, which in turn will increase the overall cost of the car to the borrower.
  • Shorter duration – This is also a reason to refinance because the borrower can close out the loan sooner. The monthly payments might go up, but overall, the amount of total interest paid could go down resulting in a less expensive overall cost for the car.

 

Additional charges when refinancing auto loans

The lender offering you the auto refinancing loan might ask you to pay additional charges or fees involved with processing the loan and executing the transaction. You may be required to pay these fees upfront or the lender might be open to including these fees in the overall loan amount that is due.

If the latter is the case, then the borrower will have to pay the fees via monthly repayments which may go up slightly to include the fee component. If the fee component is included in the total loan amount, then interest may be charged on it in the form of an increased APR (annual percentage rate).

 

Quick and easy process of requesting an auto refinancing loan

WowLoans has set up a quick and simple process to process auto refinance loan requests. All the borrower has to do is visit the website and fill out a quick form that hardly takes minutes. Even borrowers with bad credit can request for an auto refinance loan. There is no need to make a visit in-person or deal with a long list of documents.

The loan request process is free and can be done from the comfort of your living room. Once we receive the request, you will get a decision instantly as to whether you qualify or not. If you are approved, then you can visit us with all the necessary information like your existing loan information and your car documents. That is pretty much how the process gets started.

 

auto refinancing loan Application
auto refinancing loan Application

Types of auto refinancing

The traditional way

This is the standard option in which you get lower interest or lower monthly payments. In many cases, you may even get the benefit of no payments for the first 3 months. The benefit of a lower cost on the loan will span the life of the car.

The cash-back option

You can sometimes get a cashback off the current value of your car when you refinance your auto loan. This cashback amount can then be used for productive purposes like paying off an existing loan or investing in an appreciating asset.

What is the amount of savings with an auto refinancing? 

WowLoans has a loan calculator that you can use to estimate exactly how much money you will end up saving by refinancing your existing auto loan.

You can also compare the terms of the new refinancing loan with the older existing loan. The savings are generally visible either through reduced monthly payment amounts or lower interest component in the total repayment amount.

The cash-back option, in which you get upfront money based on the value of your car, is another type of saving. It is a useful option if you are in need of some cash upfront.

Refinancing an auto loan and paying lower monthly amounts will free up some cash and allow you more breathing room. Your financial burden can be reduced accordingly. The exact savings will be determined by your loan request, your overall profile, and your exact situation.

Auto Refinance to Rebuild Credit Profiles

If you feel that going for an auto loan refinancing will adversely affect your credit score, then think again. The actual situation can be quite the opposite. You can actually improve your credit score in the long run by availing of an auto refinance loan.

Besides improving your credit profile, you can also enjoy lower interest rates and lower monthly payments because of the refinancing. You can even repay your loan back quicker depending on the terms offered on the refinanced loan.

You just need to ensure that your loan repayment activities will be reported to the major credit bureaus. With an auto loan refinancing, you get an opportunity to do the following:

  •         Enjoy flexible loan terms
  •         Negotiate a shorter or longer loan tenure
  •         Not face an upside-down loan which happens when the amount owed is greater than the value of the car
  •         Lower monthly payments
  •         Lower interest rates
  •         Higher savings over the life of the loan
  •         Improvement in your credit scores

 

How soon can you refinance an auto loan?

The answer is as soon as you can qualify for a refinanced auto loan and meet all of the lender’s requirements. There is no fixed timeline or deadline after which you can request for an auto loan refinance. Theoretically, you can refinance a bad credit auto loan right after the purchase of a new car.

In order to refinance an auto loan, you do need to have certain documents from your state’s DMV. Processing of the car’s registration information can hold you from getting approved for a refinancing of your car loan.

The process of refinancing auto loans

Refinancing an auto loan begins with you conducting diligent research. Make sure you fully understand how refinancing works. Search for multiple lenders and compare the offerings of each provider. Also, understand how the impact on your credit report is minimal.

You do not want to request a refinance with multiple lenders only for each one of them to run a hard check on your profile one after the other. The following are the main steps involved in refinancing auto loans:

Review your credit report

The very first thing that you need to do before you even start researching refinance service providers is to check your credit report. You can ask for a free report from any of the big three credit bureaus. The main idea here is to look for any mistakes or inaccuracies in your credit report.

Such inconsistencies can happen. Why should you have to suffer from an incorrect credit report? Reviewing your credit report also allows you to understand where exactly you stand financially. It will give you a better idea of how your credit score will get affected by the refinancing. Creating this financial awareness will help you with your auto refinancing with WowLoans.

Research Auto Refinance Providers

After getting your credit report ready, the next step is to start looking for auto refinance lenders. The idea here is to compare the working style, the service levels, the reputation, and the reviews of each prospective lender. It is also important to compare the terms and conditions being offered by each of these lenders.

Going in-depth with at least 3 or 4 service providers is recommended. Make sure you read the fine print wherever there is such detail available because that is where the important facts are often mentioned. Knowing as much as you can about a lender will save you time later on when you negotiate your loan terms.

Expect a temporary dip in your credit score

Whenever you take a loan, the lender conducts a hard check eventually and your credit score takes a small hit. This must have been true when you took out your existing auto loan.

Expect the same to happen when you refinance that auto loan as well. However, if you make your repayments in a timely manner, then your score may eventually rise even higher than where you first began. Being a responsible borrower gives you the opportunity to turn around your credit report if you have bad credit. Variations, positive and negative, are to be expected when you go for auto refinance.

Try not to go overboard with the loan requests 

When filling out loan request forms on various refinance lender websites, you might have the temptation of also approaching alternative types of credit providers in order to find credit. However, approaching too many lenders is not advised because it will make you look desperate for cash.

Lenders will eventually find out, through your credit report, how often another lender has run a check on your profile. Therefore, try sticking only to auto loans for the moment.

The significance of Interest Rates

The interest rate that you receive on your refinance role is very important because it will determine the total cost of the loan for you. It will also influence the monthly payment that you need to make going forward.

The interest rate is also known as APR or Annual Percentage Rate. This APR includes often includes the interest component as well as any fees that you have to pay for refinancing your auto loan. Sometimes, the fee is over and above the APR which the refinancing lender offers you as part of the loan terms. WowLoans offers the most competitive interest rates in the industry. Having the lowest interest rate will result in a lower monthly payment and low overall costs for the borrower. 

How to get the lowest interest rates on auto refinance

In order to get the lowest possible interest rates, the first thing that a borrower must do is research and compare the offerings of various refinance lenders. Close attention should be given to the following metrics:

  •         Lender’s reputation and service levels
  •         Interest rate or APR offered
  •         Term of the loan
  •         The total cost of the loan

You can request a refinance loan by filling out the request form with multiple lenders. These lenders will most likely conduct a soft check on your credit. A soft check will not affect your credit score. With a loan provider like WowLoans, you will get a response on your loan request form instantly. You will know immediately whether you qualify for the auto refinance or not.

Collect approvals from a few loan providers and then compare the terms being offered. You can compare interest rates, fees, duration of the tenure, and then select the best deal.

What are the average refinance interest rates in the US?

The interest rate depends on multiple factors. You have to take into account your credit score, your vehicle, the mileage, and many other things. For example, if your credit score is low, your interest rate on the auto refinance will naturally be higher. So, it is difficult to come up with a single number for every auto loan borrower.

However, statistically speaking, the average interest rate offered by some of the best refinance companies in the US on a 5-year car loan is about 4.2%. However, the actual interest rate that you receive will depend on how the lender evaluates your risk profile. A higher interest rate will increase the cost of the loan to you while a lower interest rate will reduce the total cost of the refinancing.

How much part does the current car value play?

A major role! The current value of your car is critical. It basically determines the amount of refinance loan that you will receive. It is like any other loan where the value of the underlying asset determines the loan amount. Think about a mortgage on a house that has gone up or gone down in value.

If your car is more in value than the outstanding loan amount, then you may get some cash upfront. If the value of your car is less, then things become trickier. Generally, refinance lenders will not approve vehicles that are very old or have mileage greater than 100,000 miles.

Cars more than a decade old may also face challenges when trying to refinance. However, you shouldn’t give up if your vehicle is old. You can still request for a loan and see if you get approved. It is always a good idea to explore what you can get.

Finding it hard to decide whether to go for auto loan refinancing?

If you are contemplating whether to go for refinancing or not, then you need to consider a few things. First, you need to think about your existing loan. Is there anything that you are not satisfied with? If yes, then you can start researching refinancing options.

You will have to find an option that fixes the unsatisfactory part in your existing loan. Otherwise, there is no reason to refinance the current auto loan. You only do so if you get something better than what you already have. Sometimes, the interest rate is not the only factor in going for refinancing.

The consideration is about the overall deal that you are getting. This could mean a shorter tenure, a lower monthly payment, or even getting some cash in hand if the value of your car is higher than the outstanding loan amount. If you can find a refinancing deal which in your opinion offers favorable terms, then consider switching over. Here at WowLoans, we are committed to providing you with the best deal.

WowLoans for your Auto Refinancing needs

WowLoans has been in the industry for a long time. It is a trusted name with plenty of happy customers. WowLoans has worked with borrowers from all credit profiles. We work with bad credit borrowers as well and have solutions to cater to a wide range of financial situations.

Our refinance loan request process is quick and hassle-free. Wowloans prompt customer service executives will answer all your questions and are here to help you with anything related to auto refinancing. Our loan interest rates are among the lowest in the industry. We can even be more competitive than buy here pay here lenders and rent-to-own car options. Affordability is what we focus on.

Our loan request process is completely online which means great convenience for you. You can pretty much submit a request from the comfort of your living room. Give WowLoans a call and find out more.

 

auto loan refinancing
auto loan refinancing

 

The online request procedure at WowLoans

First of all, the auto refinance loan request process is free of cost at WowLoans. In other words, it does not cost you anything to simply fill out the request form and submit it. The form is short and only takes a few minutes to submit.

Once you send us preliminary information on the form, we will immediately evaluate the basic profile and give you a decision on your approval. If you do get approved, then you will then receive the loan terms along with the interest rate, the tenure, and the monthly payment amount.

We are authorized to do business across various states throughout the US. Our network is wide and we offer you a transparent simple process to refinance your auto loan.

 

Request an auto refinance loan and get benefits like:

  • Lower interest rates
  • Lower monthly payments
  • No loan pre-payment fees
  • All credit profiles are eligible to request
  • Flexible terms and policies
  • Customer-centric approach
  • Save you money

Start saving money by refinancing your auto loan with WowLoans