What does it mean to refinance a car loan?
Because interest rates change over time, after you’ve had your loan in place for a while, rates may improve or worsen in the market. To refinance your loan, it means basically to take out another loan for the remaining amount of your current one, but at a better rate so that you essentially are getting an aggregated (and cheaper) cost of payment.
Refinancing means that you pay off your existing car loan with a new loan. Your new loan is generated at a lower interest rate, with an increased term. How much does it cost to refinance? Fees associated with refinancing a car loan are minimal. Usually only title transfer costs and processing fees. When is refinancing useful? Many times, people with bad credit, no credit or those that have experienced bankruptcy will receive high interest rates when applying for car loans. Once stability is established by means of a positive payment history, you can qualify for a lower auto loan interest rate. Typically, one year of timely payments should be exhibited before refinancing should even be considered. Refinancing is also a good option for individuals that are having a hard time paying their current car loan. Why? As mentioned, by refinancing you can reduce your monthly payments by stretching out the length of your loan. However, if you are in debt, you are not going to obtain a lower intere
