Car Refinance Top 4 Facts to Know
When it comes to a car refinance, there is a lot of misinformation floating around. Learn how to discern fact from fiction in order to get the best rates with these car refinance facts.
Fact #1. Unlike a mortgage refinance, appraisals aren’t always necessary to refinance a car loan. Plain and simple, if you owe money on the car then you can probably refinance the loan even if the car is worth less than the loan value. Since cars and other vehicles rapidly depreciate or lose value once taken off the lot, it’s not unusual to owe more than the car is worth. Millions of Americans still manage to refinance a car loan and you can too.
Fact #2. Credit Counts. Before applying for a car refinance take time to run your credit score to verify there are not any errors or other problems. Credit counts when it comes to obtaining a car refinance; while you might still be able to refinance an auto with bad credit, don’t expect to get the best rates. The better the credit – the better the interest rate.
Fact #3. You Don’t Have to Wait. Many car buyers fall for high interest rate financing provided by the dealership only to learn later they could have qualified for a lower rate if they had shopped around. Fortunately, you don’t have to wait or hold onto a high interest rate auto loan. Instead, apply for a car refinance in as little as a week. Shop online to find the best rate then simply pay the transfer fees to transfer the lien holder. Don’t forget to inform your insurance agent about the new lender and update the paperwork. It’s also a good idea to verify the paperwork was properly recorded to avoid complications in the future.
Fact #4. Watch those Roll-Over’s. While it is possible to refinance a car without much equity, keep in mind it could come back to haunt you later especially when it comes time to purchase yet another vehicle. The existing loan will need to be repaid in full at which point you will either be forced to come up with more money out of pocket or tack on additional debt to the price of the new vehicle. Depending upon how long you tend to keep your cars and what type of vehicle you purchase in the future, the amount may be minimal or substantial.