Is Auto Refinancing a Good Option? CarFinance.com Offers Advice for Below-Prime Consumers
Auto refinancing applications are on the rise in 2013 as consumers seek to lower interest rates, monthly payments and/or extend/reduce length of term
Irvine, CA, June 11, 2013– With auto refinancing an increasing option for consumers this year, CarFinance.com, an online direct lending site dedicated to helping car buyers and owners who have less-than-perfect credit, has released its 2013 Auto Refinancing Tips. According to CNW Research, auto loan refinancing is predicted to grow to 14.1% of existing contracts in 2014, a 12% percentage increase since 2012, and a 228% increase since 2009.1
Auto refinancing is not for every consumer, say the experts at CarFinance.com; but for car owners who purchased their vehicles when rates were much higher — or for those who simply want to lower their monthly payments — refinancing could make perfect sense. CarFinance.com data2 shows that the three most common reasons for a refinance are: 1) to lower the monthly payment, 2) to lower the amount of interest paid or 3) a combination of both.
As the following chart shows, the savings on interest and monthly payments can be significant:
CarFinance.com 2013 Refinance Top Tips
According to CarFinance.com, one of the most important things for consumers considering auto refinance to remember is that in most cases it doesn’t make much sense to refinance if the APR cannot be lowered which, as the chart above demonstrates, leaves term as the key variable for the consumer. For example, a consumer can keep his/her monthly payments the same but, with a lower APR, the loan can be paid off more quickly. Or, if the consumer is focused on maximizing monthly cash flow, taking advantage of the lower interest rate and extending the terms to lower the monthly payment can make sense.
Whatever option a consumer chooses, CarFinance.com suggests that he/she answers the following five questions before applying for refinance.
Five Questions Consumers Should Ask Before Refinancing Their Auto
1. Have I purchased a new or used car in the last 36 months?
Today’s interest rates may be lower than they were when the original loan was financed, so there is a potential for savings. Also, if the consumer has been making all payments on time and improved his/her credit since originally purchasing the car, the savings could be even more.
2. What is my refinancing objective?
By refinancing a car loan a consumer can 1) lower the monthly payment, 2) save in total interest paid over the life of the loan, or 3) do both. Refinancing makes sense if the consumer is able to improve the loan terms, but not every person or vehicle will qualify.
3. Will I qualify?
As long as the consumer has been making his/her current auto loan and other payments on time, chances are good that he/she will be approved for refinancing.
4. Will my car qualify?
With the exception of specialty collectable and exotic cars, heavy duty trucks, and commercial or damaged vehicles, as long the consumer’s vehicle has less than 100,000 miles on it, and is no older than 8 model years, it is likely to qualify.
5. Will my existing loan qualify?
The outstanding balance on the consumer’s current loan should be at least $10,000, as many lenders won’t qualify for loans less than $10,000. The larger the outstanding balance and the more the consumer can lower the interest rate, the greater the potential for savings will be.
Four Things Consumers Should Know Before Applying for Auto Refinancing
1. If a consumer thinks that he/she can get a better loan than the current one, he/she probably can. Refinancing a vehicle is a much simpler and quicker process than refinancing a house. In fact, for consumers who choose to do it online, it can take only a few minutes to apply.
2. If the consumer purchased the car very recently, before applying for refinance, he/she needs to make sure the title work has been registered with the DMV. The rule of thumb is to wait 90 days after your purchase.
3. It is important to be sure that all paperwork is available: proof of income/employment (recent pay stubs, W2s or tax returns), proof of residence (utility bill, bank statement, rental agreement, etc.), as well as Proof of Insurance and Proof of Identity (a valid driver’s license, passport, etc.). The lender will also want to know about the car, its Vehicle Identification Number (VIN), how many miles it has, and what condition it is in.
4. Doing homework is key: consumers should go online to compare the interest rates, terms and payment he/she qualifies for with those of their current loan. Explore completing the entire refinance process online with a reputable lender, such as CarFinance.com, where the consumer can apply directly for a refinance loan, receive timely approvals, and complete the whole process virtually paperless from the comfort and privacy of home.
Read about the Top Ten Most Frequently Refinanced Vehicles by below-prime consumers.
2 Examples based on 900+ actual customers CarFinance has helped through refinancing.
CarFinance.com’s (www.carfinance.com) is dedicated to helping the nation’s large population of car buyers with less-than-perfect credit purchase a quality, late-model vehicle. CarFinance.com empowers car shoppers to apply for a new or used car loan, or potentially lower their existing car loan payments through refinancing, from the comfort of home. The entire process is completed virtually online directly with the lender, and personal information is kept private, safe and secure. CarFinance.com enables car shoppers to walk into the dealership with their financing in place and confident they can secure a better deal by negotiating price as if they were “cash buyers.” Headquartered in Irvine, California, CarFinance.com is led by the team that built Triad Financial, one of the largest non-prime U.S. auto finance companies.
Melanie Webber, mWEBB Communications, (424) 603-4340, firstname.lastname@example.org
Elizabeth Johnson, mWEBB Communications, (213) 713-4865 email@example.com