How to Refinance a Car Loan
Even though it’s a good idea to refinance a car loan, many people simply learn to live with high rates and expensive car payments because they aren’t sure how to go about obtaining a new car loan. Fortunately, it’s easier than ever to refinance a car loan and start saving money once you know how. Learn how to refinance your car loan and start enjoying lower monthly car payments by following these simple steps:
- Get Organized. You will need a copy of your current car loan including the name or names of the owners with the exact spelling and your VIN or Vehicle Identification Number. The VIN can be found either on your dashboard or registration paperwork. You will also need the age, make and model of your vehicle as well as any modifications performed on the automobile.
- Call Your Current Lender. The next step is to call your current lender and ask for a payoff amount. This is different than the ?current balance?, so be specific when requesting the full payoff amount and make a notation of how long until the quote expires. Most are for five to ten days, so if you will need additional time be sure to request a longer pay-off date.
- Check Your Credit. The new lender will pull a credit report and base your new interest rate on a combination of criteria including credit score, payment history, debt to loan ratio and other criteria. Check your credit in advance to make sure it reflects up to date information and is free from errors.
- Comparison Shop. Online comparison shopping for car refinance loans is simple; just plug in the information and wait for a quote. Many take less than an hour and can provide several to select from, making it easier than ever to start saving money on your car loan. Be sure to avoid the car refinancing scammers.
- Update Insurance, Lien and Bank Information. Once you decide to refinance an existing car loan be sure to update payment information, lien holders and your auto insurance coverage in order to avoid potential problems later.
- Verify the Lien was Paid. The state agency usually records the lien holder for any car loans – including the original car loan and new refinance loan. Once the refinance loan is taken out the original lien holder should issue a notice stating their lien was satisfied in full. Be sure to verify this paperwork was properly processed.