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A car loan refinance is a new loan that is taken to repay back the already taken auto loan. The newer loan will be at a lower interest rate and with a flexible pay package. The process is very simple and will not take more than half an hour if you have the proper documents. Car refinancing is the best way to stabilize your financial position when mounting financial pressure forces you to do so. There are 2 important reasons on why people prefer auto refinance.
The first reason is to save some money by getting lowered interest rates. The monthly payment is reduced and individuals can use this money for the other expenditures. Secondly, for redefining the loan terms such as extending loan terms, eliminate prepayment penalties to pay the loan quicker. The longer period of loan will let you pay lesser amount every month. Thus, the borrowers will not feel the pinch of debt and get adjusted easily.
Minimum Requirements:
A borrower must fulfill the following criteria to be eligible for the car loan refinancing.
* Must have completed 18 years of old
* Must have a valid driving license
* Must be a US Citizen
* The value of the car must be greater than the loan amount you owe
* Must have valid proof of current auto insurance
Most of the leading companies do not charge to apply for a car refinance. Avoid the lenders those who charge a hefty amount for the application itself. The lenders will take a notice of your application and start processing it. This is the first step involved in car loan refinancing. The lender will analyze your financial position and other holdings. Your credit proves to be a vital factor here. It is good to provide the details of assets that you have. This will give assurance to the lenders on your repaying ability. At times, the officers from the lending institutions might walk out to say that you have a bad credit rate. However, that will not halt you from getting your car refinanced.
On analyzing all the documents, the lenders also usually check the status and working condition of the vehicle. It is not preferred to go for refinancing option for a car that is more than 8 years and has traveled 1,00,000 miles. If the vehicle is in a proper condition and satisfies all the minimum eligibility criteria, then the lenders would be happy to lend the loan. However, the borrower must have a thorough knowledge on the current market interest rates to save some money.
Once all the formal procedures get over, the borrower will have to pay some fees to the lender for various transactions. In addition to that you would also have to pay fees imposed by your state for title transfer/administrative fee to handle transfer of lien holder/name which varies from $5 to $75. The fees would be altered depending upon the lenders. Upon paying all the fees and completing the procedure, the new refinancing lender will pay off the current auto loan payment to the old lender, while you continue paying on the new car loan. This is how auto loan refinancing works exactly.
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