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Publish Date - July 12, 2021

Author: Dale Peterson

Categories:   Auto Loans & Financing    Refinance To Save    The myAutoloan Difference   

Auto Loan Refinancing - Best Moves

There are two main reasons for choosing to refinance an auto loan. Typically, they include reducing the monthly payment or lowering the interest rate. But did you know there are a variety of reasons for auto loan refinancing? Auto refinancing expands far beyond just saving money. Keep reading to discover the many advantages and why it can be highly effective for individual goals.

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Car Loan Refinancing Gives You More Advantages Than Saving Money

There are two main reasons for choosing to refinance an auto loan. Typically, they include reducing the monthly payment or lowering the interest rate. But did you know there are a variety of reasons for auto loan refinancing? Auto refinancing expands far beyond just saving money. Keep reading to discover the many advantages and why it can be highly effective for individual goals.

Is car loan refinancing the right decision for your situation?

If you're considering whether to refinance your car, most likely, you're hoping to find a way to lower your monthly payment. Maybe your budget has gotten a little too tight. If that is your situation, then you're asking the right question. Car loan refinancing simply means taking out a new loan to pay off the old one. Not only does that give you a great opportunity to lower your monthly payment, but you can also get better terms.

It could be when you purchased your car, you were in a different financial situation, and the approved interest rate was higher than it would be now. Or, you didn't get the opportunity to shop lenders to choose the right one. Now is a great opportunity for a second chance. A lower monthly payment can provide more access to your disposable income. You can use the savings towards a vacation, emergency fund or put it towards buying another vehicle.

Auto loan refinancing can often contribute to decreasing your debt-to-income ratio, which can be very helpful if you're planning on purchasing a home soon. It’s True! Often, the extended terms can make a huge difference in qualifying for a mortgage. While you should never make this type of decision after applying for a mortgage since it can put you at risk of being denied, it is an exceptional way to plan early and get a head start on restructuring your credit obligations. Remember, you can always make the same monthly payment that you have now. You're just not obligated to do so, and that puts you in a much better position to pay off the loan sooner.

What is your current interest rate? Did you get a prime rate?

Unfortunately, sometimes when you buy a new or used car, you're limited to the information that dealerships provide about the available lenders. That means they have all the power. If you want self-empowerment, now is your moment to take control and get the interest rate that you know you deserve. Of course, not all car buyers qualify for the prime rate. And sometimes buyers make quick decisions without doing a lot of research. In both of those scenarios, you may end up with an auto loan that is dissatisfactory. But here's the good news, you can do it all over again.

Contrary to popular belief, you can refinance your loan immediately after it's assigned to the lender. And if you added an extended warranty, gap insurance or any other enhanced package to your original loan, you may be entitled to a refund. Use the refund towards your new monthly payments after refinancing. Or, put it towards your vehicle maintenance or buy new tires. Get creative!

Are you satisfied with your current lender and how they service your loan?

A loan with the best rate is one thing, but if the customer service is less than satisfactory, it can be frustrating. And it can have an impact on the enjoyment of your car. Working with myAutoloan.com solves all those issues. Do you ever experience slow payment processing or errors with posting your payment? How about bad customer service representatives or difficulty in reaching the lender by phone? These are all legitimate reasons to choose auto loan refinancing. After all, the lender is making a profit from the interest you're paying. We work with the best lenders with great reputations to make sure you are treated fairly and with knowledgeable representatives to service any of your concerns or questions. You deserve to be treated in a way that is efficient and respectful. Is it time to say goodbye to your current lender?

Do you know whether your current loan is a recourse or non-recourse loan?

A non-recourse loan means that if you default, the credit obligation is transferred to you. With a recourse loan, the credit obligation is transferred to the dealership that sold you the car. Generally, a recourse loan is used when a buyer has poor credit. Yes, it happens to good people too. A host of issues from illness to job loss can create havoc with your credit.

The recourse could be 100 percent or whatever percent the dealership agreed to for loan approval. Think of it like a co-signer. Why would you want to refinance a loan when you're not solely responsible for the credit obligation if you default? Because, while you are the owner of the vehicle, there is still a shared interest with the dealership. And that means you're beholden to them. Although that's helpful to get a loan if you have poor credit, after making consistent payments on time, you may be able to take your financial power back. To find out if you have a recourse or non-recourse loan, take a closer look at the contract, particularly the reverse side. You may be in for a surprise.

For almost two decades, myautoloan.com has helped countless car owners with auto refinancing. Our mission is to continually offer innovative solutions to consumers and use advanced technology to enhance the experience. As a recognized leader in the direct-to-consumer industry, we're committed to serving consumers with the highest level of integrity and respect. To learn more about car loan refinancing, check out our finance guide. It has lots of ideas and tips to save your money. Good luck and happy financing!