How to refinance your auto loan and potentially save hundreds of dollars a year – WPXI
Could you use a little more wiggle room in your budget each month? Try to refinance your auto loan!
Here’s What You Need To Know About Auto Loan Refinancing
You are probably familiar with the idea of refinancing when it comes to a mortgage or maybe even student loans. But did you know that you can refinance your auto loan?
Yes, that’s true, although not many people are familiar with this potentially economical option.
A recent TransUnion study of 1.5 million refinancing transactions in 2013 and 2014 found that the average consumer reduced their interest rate by 2.4%, saving an average of $ 52 / month by refinancing an auto loan in the process.
That’s a lot of money in their life – and maybe yours too, if you choose to refinance.
Generally, you’ll want to make sure your car payments are up to date if you’re looking to refinance. After all, paying all your bills on time is every month the # 1 way to get good credit, so you can borrow money on favorable terms.
Plus, you shouldn’t owe more on the car than it is worth if you are looking to refinance an auto loan. In other words, you don’t want to be “underwater” or “upside down” on your vehicle.
If you owe more on a vehicle than it’s worth, that might not stop you from refinancing entirely, but you will likely need to bring money to the closing table to reach your goal.
Not sure if you are upside down in your car? You can increase the value of your vehicle on a site like Kelley Blue Book, which allows you to search by year, make and model of your particular vehicle.
In this context, here are the basics of refinancing your car loan …
Why refinance an auto loan?
Most people plan to refinance their car loan to reduce their monthly loan expenses and / or to reduce the total amount of interest they are paying on their car bill.
Who Can Help You Refinance Your Auto Loan?
Credit unions are a great place to do any type of refinancing, including car loan refinancing. If you are not already a member, you can locate the nearest credit union at ASmarterChoice.org.
This makes online price comparison very easy. Here’s an example of Chase’s current rates:
Rates subject to change without notice.
Are there any costs associated with refinancing an auto loan?
In general, there is no charge for applying for an auto loan refinance.
However, you may need to pay property fees and state fees – two nominal fees that vary by state – to complete your refinance.
Will the type of vehicle I own prevent me from refinancing my auto loan?
Yes, it is a possibility, but it varies depending on the lender.
For example, Capital One explicitly declares it will not refinance a car loan for the Oldsmobile, Daewoo, Saab, Suzuki or Isuzu.
But in reality, banning the refinancing of certain nameplates like Capital One is quite rare.
A more common scenario is that the age of your vehicle and your odometer reading will be factors that can make or break your claim when it comes to auto refinancing.
For example, Wells Fargo will not refinance any vehicle that has driven more than 100,000 miles or that is eight or more model years old. In another example, Bank of America will not do this if your ride is 10 years or older.
Capital One, meanwhile, has some of the strictest guidelines among major bank auto refinancing programs. They require vehicles to have only seven or more model years for refinancing.
Anything else I should know?
You will need your car’s title deed, proof of insurance, and proof of income in order to complete your auto loan refinance.
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