The Auto Refi

One of biggest complaints when leaving the auto lot is you got a good car, bad loan. Auto dealer finance departments know that you are too excited about that new car or the price to worry about the interest, or term of the loan. Before you know it you have a bad loan, with a huge payment and terrible rate! Good news, you can usually do something about that!


Auto Refinance
Auto refinance is simply a loan that pays off your auto loan. The loan has new terms and is usually done to either lower your payment, lower your interest, or both.  Refinancing your loan for a lower payment will generally extend your term, (more interest) but can make that car a lot more affordable. Lowering your interest will usually lower not only the amount of interest that you will pay over the life of the loan but lower your payment as well.

DetailsAn auto loan is usually one of the easiest loans you can qualify for, the application can be done over the phone and a qualification can be given as quickly as a few minuets.  Auto loan terms are commonly from 36 all the way to 72 months. The lowest amount any company will refinance is generally $7,500 and the most $75,000.

Will there be a fee?
There is generally no fee to refinance your auto IF you are using a reputable company. There may be small fees for example to transfer title but they should be very small in comparison to the amount of money you are saving.

Warnings!!!
The auto refinance is NOT for everyone! A refinance should never be an impulse buy. I recently walked into my bank and my personal banker went into this whole bit about how much money I could save without ever pulling my credit or knowing the specifics of my current auto loan. The truth is personal bankers and tellers are there to make money for the bank. Don't believe me? I used to hire them! With that said, never leave the bank with something you didn't go intentionally go in for. DO YOUR HOMEWORK! Also, only take out the amount you need to pay off your auto loan. Many bankers will try to get you to pay off other debt or give you spending money using the equity you have in your auto. This makes the amount of the loan bigger (more commission for them) but leaves you with a bigger auto loan which equates to more overall interest. I have seen to many people that should have cars paid off in real financial trouble or even lose their cars because of this.

My Views
While the auto refinance may be a great option for some, it is not for everyone. Remember to do your research before you make any financial decisions. Compare rates, terms, and fees to make sure you are getting the best deal out there. I am always an advocate for my local credit union which usually has not only the best rates but a real person I can yell at if I need to!
Good luck my friends! :)