When you initially borrow money to finance a car, it is easy to get caught up in the excitement of a new ride and make hasty decisions about what you can truly afford when it comes to a monthly payment. If you find yourself struggling to make your car payments on time every month, it is much better to go ahead and look for an auto loan refinancing option to lower your payments. However, there is no doubt you have a few questions about what auto loan refinancing can involve. Here are a few of those questions and the answers that you should know the answers to.
If you refinance the car loan through a different company, will it hurt your reputation with the initial lender?
If you choose to refinance the loan through a different company, the lender may not specifically know that this is what you are doing. They will only know that the loan is being paid off before the term of the agreement is over. However, even if you share the information that you are refinancing, the lender will not see this as a negative thing.
What is the best way to find a refinancing option that works for you?
There are many different lenders and companies that offer auto loan refinancing. Therefore, finding the best can sometimes be a challenge. There are a few websites that help connect individuals looking for this type of loan with the right lenders. This will require you to enter your information one time, such as the type of car you have and what you currently owe as payoff, and you will then be given options that best match what you are looking for in a new loan. Further, it is always a good idea to get in touch with several lenders and get detailed information about things like:
- How your interest rates will change
- If you will need to accept GAP insurance coverage as part of the loan
- The loan amount you can be approved for based on the value of your car
- How quickly the loan process can be complete so you do not get behind on the payments you currently have
What will happen once you are approved for an auto refinance loan?
After you have submitted your application to a lender, you will be notified rather quickly in most cases as to whether or not you are approved. If you are, the refinancing company will walk you through what will happen. In most cases, the new company will pay off the principle balance on the previous loan without you having to physically take money to the lender. The first lien holder will then release their hold on the title of your car and send you documentation to prove it with the DMV so you can order a new title with the new lien holder's name.
Thankfully, there are a lot of lenders (such as Saginaw Medical Federal Credit Union ) who specialize in auto loan refinancing and are always happy to accept a new customer. If you think that refinancing your auto loan is the best choice, talk to a few lenders to find out what your options may be.