REFINANCING AN AUTO LOAN

Refinancing is the payment of one’s current loan using a new loan from another lender. The new lender pays off the old loan and the customer makes his/her loan payments to the new lender.

Customers are usually offered lower interest rates as well as lower monthly payments when refinancing. Because interest rates fluctuate, it is a good idea to shop around for lower competitive rates, especially within the first year of obtaining that car loan. You could end up saving a whole lot of money by the time the loan is paid off.

While auto refinancing has its own advantages, it is not without disadvantages. It is important to understand both when considering refinancing your auto loan.


ADVANTAGES OF REFINANCING:

Refinancing helps you save money by lowering the interest rate. A lower interest rate is usually the first consideration for anyone looking to refinance an auto loan. If rates have gone down since you purchased a vehicle, it is prudent to shop around and see if you can refinance your auto loan, of course at a lower rate. This saves you money in the long run. And even more savings if you refinance during the early part of your term, when most of your payments go to the interest payment. It can also help you pay off your car loan earlier because of the reduction in the overall interest.

Also, most of the time, your payments are likely to be lower when you refinance. This is especially the case if your new loan is extended beyond the initial loan payment schedule. The basic advantage with this kind of arrangement is that it helps reduce the total monthly expenses, especially for those who are working on tight budgets. Plus, you will have some more money to pay for other debts (which might have a higher interest), take care of other unexpected expenses or sending in an extra amount towards your loan, without exceeding your income.

DISADVANTAGES:

Refinancing may not save the consumer any money in the long run, if the loan period is extended beyond the original schedule. Most customers are attracted to the new lower payments, without paying attention to how long they have to pay the loan. Unless there is a big difference between the new and the old interest rate, one could end up paying more money than on the original loan. But this can be prevented if you strive to pay more than the required monthly payment, thus bringing you closer to paying off the loan earlier, hence the savings.

Fees: Sometimes, a customer might incur lien holder fees, re-registration fees, or in very rare cases, early payment penalties. These are very negligible though (somewhere less than $100 for lien holder and re-registration fees), which you can save on the new loan after about three payments.

Temporary reduction in the credit score, because in the search for auto refinancing, the lender will check your credit score, which will lower your score by a few points. But this should not be a big deal, as the points will shoot up again when you continue making payments.

Staying in debt a little longer. When one’s payment is extended because of the newly refinanced loan, it keeps the customer in debt longer than it should have taken.

All in all, it is wise to refinance if you will be getting a better interest rate. To realize the benefit of refinancing however, you should try to pay more than the minimum monthly payment and pay it off earlier than anticipated.

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Need a Car Loan With Bad Credit? How to Get Free Car Grants For Your Next Auto

Getting approved for a loan is harder than it ever has been before. Not only are lenders tightening their belts and being more cautious as to who they lend money to, but millions of people are facing credit problems. With the amount of economic turmoil over the past several months, late payments, job loss and debt are catching up with people and making it seemingly impossible to get approved for a personal loan.

While your traditional bank lender may not be able provide you with the money you need to drive off the lot, there are other resources that can help you buy your new car. Regardless of credit or income, there are online lenders that can help you get the money you need.

Because of their low overhead, online auto lenders are willing to take a little more risk and provide financing to those who may have not-so-perfect credit. In addition, you may qualify to obtain a car grant, which can provide you with money to go towards the purchase of your new vehicle. The best part about obtaining these funds is, if awarded, the money never has to be paid back. A cash grant is provided as tax-free money with no repayment terms.

By accessing online resources that can help you quickly find, apply and get approved for the auto financing you need, you can line up your loans before visiting the dealership. That way you know exactly how much you can afford and might have the upper hand when it comes to negotiating extra options.

Getting a car loan with bad credit is not hard when you have access to the right resources. See how you can quickly get the cash you need.

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Before Applying For an Auto Loan, Know Your Car Credit Score - See Where You Stand

Walking into a car dealership can be an overwhelming experience. You don't want to get taken for a ride, so you've done your research. You know the model specs, the MSRP and how many miles per gallon it gets on the highway. You've picked out the color, decided which upgraded features you want and which ones you can live without. You are focused; determined to show the salesperson that you know your stuff. So, they better not try and pull a fast one on you.

But you forgot one major detail. Perhaps the most important detail...you don't know your credit score.

When it comes to financing your vehicle purchase you can either get a great deal with a low, or no interest loan OR you can end up paying hundreds, even thousands of dollars more in interest over the life of your car loan. The deciding factor is your credit score.

Knowing your score before you head to the dealership can alert you to what type of financing you can expect to be offered, and help you prepare accordingly. It can also give you some added leverage when it comes time to negotiating with the dealer.

In today's economy, banks are stricter than ever when it comes to lending their money. So, the information on your credit report is vital when they evaluate your financing terms and whether or not they want to offer you a loan. Be prepared and know where you stand, and you'll be one important step closer to driving off the lot in your new car.

See your credit score for free, and find out what kind of loan you qualify to receive. See where you stand on the credit score scale and how you compare to the national average.

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Deal Or No Deal, Get Your Car on Your Terms

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As a Michigan resident, a state whose economy is very dependent upon the auto industry, I have witnessed first hand the demise of an industry due to lack of credit. It wasn't the quality of the vehicles, made by American auto manufacturers, but rather the demise of the dollar, consumer insecurity in spending, and the tightening of credit guidelines by the banks and credit unions.

The main restriction now with regards to auto loans is the credit score. I have spoken in various forums regarding the relative perception of the importance of the score. It is truly amazing the amount of weight the banking industry places upon a computer generated number.

I know of several companies that specialize in immediate credit score boosting. There are several techniques, but the bottom line end result is significant score increases in days. So, I ask you, if a person has a 619 score, falling below the general threshold lenders are looking for of 620; and one of these companies instructs them to pay down a credit card balance by $227, resulting in a 62 point score increase giving them a 681 score, above the threshold of 680 considered acceptable for most lending scenarios, are they now a more qualified or "safer" borrower?

The auto dealerships historically could make more money on the loan of a "credit challenged" borrower, and so did not seek out ways to help the consumer. It was easy to offer bad credit auto loans when there was plenty of credit available. Now, as 1/2 of most dealerships across the board have closed their doors due to low sales figures, it may make sense for them to explore the new options available for getting more people financed.

Car dealers need to try to help their potential buyers with the credit score before going to the bank with an application. Over 90% of the population could have a higher credit score immediately and not need much money to do it. The savings in the long term in lower interest rates, and just the fact that it is easy, even with bad credit, to get an auto loan, makes these "credit audit" services very appealing.

The end consumer, armed with the knowledge that they can, with almost 100% certainty, raise their current credit score in days should investigate this option. Not only will they be confident in getting the lowest rates available, but also know exactly where they stand before wasting time at the dealership. With a higher credit score, and confidence in their ability to get financed, the consumer will further have a fantastic negotiating position. Also, with a better credit profile, they are eligible for lower down payments, and with a lower rate, they can buy more car! See, it is still easy to get a bad credit auto loan!

Written by Thomas Richaard, Consumer Credit Advocate, Your Honest Agent, LLC, with 15 years experience in credit profiling, maintenance, and enhancement. Read more about articles like this on easy bad credit auto loans.

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