Whatever your credit scores, you may not have to wait until the end of your loan term to be eligible for a lower interest rate on your automobile loan. Continue reading to find out more about your options and how you can save hundreds (or even thousands) of dollars by refinancing your vehicle.
Car buyers who take out non-prime (or subprime) auto loans frequently find themselves in a difficult financial situation. Their car loans are subject to higher interest rates because they have poor credit or a credit history that has not been well established for a long period. As a result, what happened? Increased loan payments that contribute to a tightening of finances
For those who find themselves in this situation, you may be able to refinance their auto loan and give them some breathing room. However, what does it look like if you decide to refinance your vehicle, and how can it be beneficial?
The process of refinancing a car loan
In essence, refinancing a car loan is the same as purchasing the vehicle from the beginning. There is no room for haggling over the price, however, because you are already the owner of the vehicle, and the balance of the car loan is what you still owe.
When you refinance your auto loan, the lender determines whether or not you qualify for credit and whether or not your vehicle is eligible for financing. Once you’ve been approved, the lender will issue you a new financing contract for the amount owed, and they will then pay off your existing car loan in its entirety.
With our auto refinancing calculator, you can find out how much money you could save.
Is it possible to refinance my car loan?
To refinance your auto loan, you must meet the same requirements as you did to obtain your current loan. Every lender will use the same set of criteria, though they will use slightly different mathematical formulas. In general, you’ll need:
- You must have a source of income that you can document on paper.
- Sufficient financial flexibility to meet payment obligations (also known as a debt-to-service ratio).
- A credit score and acceptable credit history.
- A physical address where you can legally reside and have your mail delivered.
Is it possible to refinance my car loan and receive cash back?
With the right refinancing deal, it is possible to receive cash back. Ensure, however, that you are also lowering your interest rate and/or obtaining better terms on your new car loan at the same time.
Refinancing your automobile will necessitate the submission of certain documentation.
If you decide to refinance your auto loan, the process is fairly straightforward. You’ll need the same information as you did for your initial car loan credit application, as well as the specifics of your current vehicle. This includes the following:
- A copy of your most recent pay stub or tax return.
A pre-authorized payment agreement requires the following:
- Banking information or a void cheque.
- Identification with a photograph (so they know you are who you say you are).
- Vehicle information, such as the year, make, model, trim, mileage, and title of the automobile.
What comes next?
Refinancing can be a great way to find an auto loan that is tailored to your specific requirements. By taking the time to gather important information and conduct research, you may be able to obtain better loan terms that will save you money by offering a lower interest rate.
If you aren’t sure whether an auto loan refinances is the best option for you, consider other options for lowering your monthly car payment.
