If you need to refinance your automobile loan, there are certainly a number of options and auto loan providers available to you. Many companies are now refinancing automobile loans because of difficult economic times, but that can come with a cost. Most auto loan companies are competitive and as honest as the market requires, but there are some shady practices you should watch out for and things you should be aware of.
1. Know Your Credit Score Your credit will be a large aspect of your refinancing fees and interest rates. If your credit is considered below average or poor, you could find yourself paying outrageous rates that make it difficult to make the payments. This is a bad thing when refinancing is supposed to give you more breathing room in your finances. Know what your credit score is and find out what to expect before applying for a refinance with any given auto financing company.
2. Appraisals Contrary to popular belief, you do not have to pay for an appraisal on your vehicle before you can refinance. Unlike refinancing a house where you do have to have an appraisal the refinancing of an automobile is based on what is owed and not on the actual value of the car, truck or other vehicle.
3. Lower APR The entire reason for refinancing an automobile loan should not be buying time. It should be about trying to get a lower APR. This means that you ll need to search for an auto finance company other than your own that is willing to provide competitive interest rates. You re not stuck with 22% and 23% APR and many auto finance companies are willing to provide a significantly lower interest rate for refinances. Search for a company that will refinance for a much lower APR that will end up saving you money in the long run.
4. Hidden Fees When refinancing, you need to watch out for the same things those who are seeking a first auto loan need to watch out for. Among these things are hidden fees that can increase your payments or require you to make a large payment when refinancing. Make sure there are no application fees to refinance, and inquire as to whether there are any other hidden fees that you ll be expected to pay. If there are, consider other auto finance companies with more transparent practices.
5. Ignorance Many auto finance companies assume that their customers know absolutely nothing about the current trends, practices, etc. Don t fall prey to these predators! It s true that most normal people don t have these facts and information readily available to them because they just don t deal with refinancing and auto loans on a regular basis. But comparisons and research can quickly bring you up to speed on what other companies are offering, what to watch out for, and what you should expect when you refinance your car.
By watching out for these warning signs, you can avoid getting into a contract that you re going to regret down the road.
For a look at other leading lending services, see our auto loan financing review site.