An auto refinance is a loan that pays off your existing auto loan,
similar to a mortgage refinance, but with a much simpler and faster process. Your new
lender pays off your old loan and the title to your vehicle is transferred to your new
lender.
Why and
when should I refinance my existing loan?
Typically, consumers refinance to get a lower interest rate in order to
reduce their interest costs, or to lower their monthly payments. As with any personal
finance decision, it really depends on your individual goals. If your goal is to reduce
the amount you are paying in interest, you may want to consider an auto refinance loan
with the same or reduced term as your existing loan. If your goal is a smaller payment,
you may want to consider extending the term remaining on your existing loan, although this
may increase the total interest paid over the life of your loans.
How does it work?
Your new lender pays off your old loan and the title to your vehicle is transferred to
your new lender.
Why should I refinance my existing auto loan?
Typically, consumers refinance to get a lower interest rate in order to reduce their
interest costs, or to lower their monthly payments. Auto loan rates are at very low
historical levels, so consumers are increasingly taking advantage of this by refinancing.
When should I refinance my existing auto loan?
As with any personal finance decision, it really depends on your individual goals. If
your goal is to reduce the amount you are paying in interest, you may want to consider an
auto refinance loan with the same or reduced term as your existing loan. If your goal is a
smaller payment, you may want to consider extending the term remaining on your existing
loan, although this may increase the total interest paid over the life of your loans.
Are there any fees associated with an auto refinance
loan?
Typically, the only fees associated with an auto refinance loan are fairly standard
transfer of lien holder fees (usually $5-$10) and state re-registration fees (usually
$5-$75). These estimated fees may vary by lender, state of residence, etc. Also, be sure
to check if your existing lender has any pre-payment fees. This could factor in to your
decision to refinance.
Are auto refinance loans growing in popularity?
Yes. Since auto loan interest rates have been at historically low
levels, an increasing number of consumers are choosing to refinance their existing auto
loans.
