If you are searching for easy ways to save some money then you should check out some car refinancing tips.
If you purchased your car when interest rates were high or when your credit score was not very good the there is a strong possibility that you could refinance at a better rate and save some money each month on your car payment.
And the best part is that it will take you just a little bit of time to make the deal then you will continue to save each month with no additional work or effort required. Using these five easy tips can help to make the process fast and simple.
#1 Know Your Credit Score Before You Start
If you purchased a car when you had bad credit or no credit then you probably had to take a very high-interest rate. In some cases, you might have even been forced to shop at a “buy here pay here” car lot which is notoriously expensive. But if you believe that you have improved your credit score then you should consider refinancing your car loan. The first and most important step is to verify that you have in fact improved your credit score. There are a number of websites that you can use to check your score or many lenders offer a free credit score check once each year. After you learn your score you can decide if you are ready to begin the refinance process. Looking at websites which define credit scores and rank them as poor, good and excellent will help you to know how a lender will view your current credit score and the approximate interest rate that you should expect.
#2 Know the Value of Your Car
It is critical to know that your car is worth more than you owe on it. If it is not then you are upside down in your loan and you will not be able to refinance. This is because the car is the collateral for the loan and would be repossessed by the lender if you default on the loan. The lender will want to be sure that the value of the car is large enough to cover the balance of the loan if they need to sell it to recover their money. You can look up the market value of your car online to be sure that you are in a position to refinance.
#3 Shop for a Lower Interest Rate
Your first call when you are looking for a better interest rate should be your current lender. They are always interested in keeping customers so they are likely to consider refinancing you at a better rate if your credit has improved. This is great for you because they already have most of your information and it can save you time on the application process. Even if your current lender offers you a better rate, be sure that you continue to shop online to see what rates other lenders are offering. This has two advantages. First, you can go back to your current lender and tell them that the rate they offered is still too high and that you are finding better offers online. They might lower the interest rate on their offer even more. In many cases, they assume that a borrower is not really searching for better rates and that offering just a little bit will satisfy the average consumer. In general, borrowers will get lazy and not want to invest the time in really looking for a good rate. They simply take the half a point discount that the current lender is offering. Second, you might find a rate that is much better than your current lender is willing to offer you. Some lenders will offer an extra discount on the interest rate if they know that they are luring you away from their competition.
#4 Watch Out for Hidden Fees
Some lenders will offer lower refinance rates only to try to slide in some extra processing fees to make more money. When you are reviewing your options be sure to note any processing fees, application fees or document fees. All of these contribute to the total cost of the loan and should be considered when finding the best deal. If you have any questions call the lender and ask them to email you a statement that there are no fees involved in the loan. You have a lot of options and lenders to choose from and you should never pay extra fees.
#5 Submit Only One Application at a Time
As you know, each time you submit an application the lender runs a credit check. This can lower your credit score for a short time and you do not want to have it lowered several times as you complete applications. It is best to start with the best overall offer and submit their application first. If they make you a good offer then you don’t need to go any further and you can begin the documents to get that loan.
Why Invest the Time to Refinance
Getting a better interest rate on your car loan is a simple way to save some money each month. In addition, if you have equity in your car but are having trouble making larger car payments then you might also want to refinance. In this case, you would be focused on keeping the interest rate competitive but lengthening the term of the loan to lower the monthly payments. This can be helpful if you have just suffered a reduction in your pay, lost a part time job or have been hit with another unexpected expense that you are making payments on. Using these five car refinancing tips you should be able to invest a short time in researching your credit score and the value of your car to know if you can refinance and put yourself in a better financial position by saving on interest or lowering your monthly car payments.