When you are looking for a way to reduce your expenses, refinancing your auto loan may sound like a good idea. After all, you've been working hard to reestablish your credit. Is now the time for you to refinance?
Refinancing is the process of getting a new loan for a car or home in order to get a better interest rate or terms, which can result in lower monthly payments or savings in interest charges.
While Drivers Lane does indeed connect car buyers with bad credit with auto dealers that can help them get approved, we do not refinance car loans. But, if you are looking to refinance, we can tell you what steps you will need to take in order to do so.
The Road to Refinancing
- First of all, you should pull your credit reports. Make sure that all of the information on your reports is correct and get any errors removed.
- Secondly, research the current prime and subprime interest rates. Before you even start the application process for a new loan, check to see what the current rates are. A good place to start is Interest.com.
- If you see an improvement in your credit history and interest rates are better than what you are currently paying, it may be time to explore the refinancing option. So, your next step would be to contact your lender and request the payoff amount for your loan. The new lender will need this information in order to assemble a financing package for you.
- After you have your payoff information, determine the difference between your car’s current market value and the payoff amount on the loan. Because you will not be able to borrow more than what the car is worth from the new lender, you will need to be able to pay any difference there may be. In addition, you will need to make sure that the age and remaining value of the car meets the new lender’s borrowing requirements.
- Finally, don't be afraid to shop around for the best rate. After you have chosen and qualified with a lender that can offer you the best or a better interest rate, contact your current lender and any other associated parties and send them the information on your new contract. They will then be able to transfer the lien on the vehicle to the new lender, and pay off the old loan.
If you are in a position where you are looking to repair your credit and are in need of reliable transportation, Drivers Lane can help you. Once you complete the fast and easy online application, we will get you in touch with a car dealer that has the expertise to work with your unique financial situation. Make the first step towards repairing your credit, and get back on the road.