How to Refinance Your Car the Smart Way

How to Refinance Your Car the Smart Way
How to Refinance Your Car the Smart Way
Education
| Jun 22 2021
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How to Refinance Your Car the Smart Way

We can’t always control the circumstances in our lives, which is why at times, our financial situations may change without warning. Whether you want to simply lower your car payment, you want a lower interest rate, or you want to remove a co-borrower from your loan, auto refinance is a viable and responsible option that is available at your disposal today.


When you elect to refinance your car, Auto Approve makes the process easy by paying off your old loan and setting up your new, more favorable loan. This can be an option for you no matter what your credit score is. Most people don’t realize that they may qualify for a lower monthly payment or interest rate, or how simple it is to remove the co-signer from your original loan for whatever reason. 


The beauty of auto refinancing is that you get a fresh, new start with better terms and rates than your original loan. The fact is, most people are eligible for much better terms than they currently have. It’s always smart to sit back and reflect on how you can achieve the best possible loan terms and rules for your present financial situation. The process just takes a few minutes - you submit your information, and Auto Approve taps into their network of the nation’s top lenders to get you the best terms possible.


But, before you dive into auto refinance full-speed-ahead, let’s first look at a general overview of how to refinance your car, and if it makes sense for you.


How to Refinance Your Car


General Overview: Does Refinancing Make Sense for You?


Although auto refinance makes sense for the majority of situations, it’s still something you want to review before you commit yourself fully. If your current loan has a prepayment penalty, you will want to explore what that penalty looks like and if you can have it waived. Most of the time, there is no prepayment penalty, but it’s always wise to do your due diligence and check.


If there are additional fees associated with canceling the loan, like needing to re-register the vehicle and transfer the title after refinancing, plan for this ahead of time. Fees can change per state, so it’s worth checking on what the specific details are for your state.


You also want to consider the age of your car. Some lenders will be stricter about refinancing cars that are over 10-years-of-age or with more than 100,000-miles on the car. 


Overall, though, if you need to change the terms of the loan immediately or your credit score has improved, then the cost savings that come with these changes can override the fees mentioned above. That’s why auto refinance is something that is recommended for the majority of people today. We just want to encourage you to, as always, do your homework.


Gather the Necessary Documentation:


Now that you have determined that you want to pursue auto refinance, it’s time to collect the necessary documents to make it happen. Here is some of the information to anticipate presenting: employment information and history, residential information and history, social security number, date of birth, proof of mortgage statements, and address.


Some lenders will want to know that you can repay the loan you are signing to. A paycheck stub, or a tax return can satisfy this request. They may also request proof of insurance as part of the process.

 


Next, you will need to know the balance on your current auto loan, as well as that lender’s information if you are switching to a new lender. It’s worth noting your interest rate and length of the prior loan so that you can use that as leverage when shopping for a new loan.

You will need the vehicle identification number (VIN), which can be found on your insurance card or located on the registration and title statements. 


Speed Up the Process with Prequalification:


It’s time to expedite the process with prequalification. Applying for prequalification can be a great place to start so that you know your leverage. To get prequalified, the lender will gather a few pieces of your personal information as stated above. Once the information has been gathered, Auto Approve will prequalify your file and give an estimate or pre-approval that will provide you with an idea of what rates and terms you qualify for at that time.



Apply for the Auto Refinance Loan:


Ok, the moment is here. You are ready to apply! You will need to complete a loan application. Auto Approve then decides the best fit lender based on the prequalification and the credit profile of the applicant. Our team will submit the application to the lending institution. We will contact you for approval prior to submitting the application so you are in the loop from start to finish. Should the loan be approved, you will sign the paperwork presented by the lender, detailing the terms of your new loan. Always keep a record on file for future reference. 


The minimum amount you owe each month will be included via the digital copy of the deal. Be sure to never go below the minimum amount. If possible, pay more than the minimum amount to shorten the life of the loan.


Transferring Your Old Loan:


The transition from your old-to-new loan will be handled by Auto Approve. Be sure to still reach out to the previous lender to ensure that the transition has been done timely and professionally. 


When to Refinance a Car Loan


We know that was a lot of information, which is why Auto Approve is here to assist you throughout the entire experience. We make refinancing simple and easy, saving you time, frustration, and potential credit dings along the way. Start with a quote through our platform, and allow us to work with banks and credit unions to find your best rate. That’s it. Auto refinance, made with you in mind.


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