Getting an auto loan to refinance has the potential to save you hundreds of dollars each month and thousands over the life of your loan. However, you should have a clear understanding of how the process works before committing to anything. The good news is that you can get an auto refinance without ever visiting a bank or credit union branch. Here’s what you need to know about refinancing your car with an online lender.
Find out why you want to refinance
The first step in refinancing your auto loan is to find out why you want to refinance.
You may be able to lower your monthly payment by extending the length of the loan term, and if so, this can make a lot of sense. For example, let’s say that you have a 60-month car loan for $19,000 at 4% interest and an annual percentage rate (APR) of 4.5%. If you’re paying $350 per month on this loan (or $4,200 per year), extending the length of your payments by two years will drop your monthly payment down by almost half. Without any other changes in terms of how much money is borrowed or how much interest gets paid back over those two years. Reducing each monthly payment from $350 down to $250 would save you around $1,500 total during those two extra years just enough room for another vehicle payment every year.
One thing worth mentioning here is that extending these kinds of loans can sometimes involve higher fees than they otherwise would’ve had originally but don’t worry. There are often ways around paying hefty fees like these without having them take away too much from what can be saved overall through proper refinance research beforehand!
Choose the best auto refinance lender
The first step is to choose an auto-to-refinance lender that meets your needs. The best way to do this is by researching the different lenders and comparing their offerings. For example, you can find out from their website how much money you can borrow, what the interest rate will be, how much of a down payment you need, and whether there are any fees for the service. This research process doesn’t have to take long because there are many online resources available that you can use. These include websites such as Best Auto Refinance Lender which provides information on finding the best auto refinance lenders based on customer reviews and ratings. So that consumers can make informed decisions when choosing an auto refinancing company before making a commitment with them.
As part of your research process, consider these factors:
- Reputation: The reputation of an auto refinance lender is important because it tells you if they have satisfied past customers who were able to get a loan easily without facing any problems when applying for funding or during repayment periods (if applicable). Reputable companies also offer high-quality services with minimal delays in processing applications for credit approvals. Therefore, take time looking into each company’s track record before deciding which one suits best according to your requirements.
- Improve your credit score: This is the most important factor that lenders consider when deciding whether or not to approve you for a loan. If you want to refinance your auto loan, it’s best to do so while you still have a good credit score and before any late payments appear on your report.
- Check your credit report and score regularly: You should check both of these at least once a year because mistakes are common and can negatively affect your financial health if left unchecked. If there’s something wrong with either of them, contact the organization that sent it (e.g., Equifax) right away.
Gather all the required documents
You should gather all the required documents to ensure that the auto refinance process completes smoothly. These include:
- Your driver’s license.
- Your social security card.
- Your income documentation, including paycheck stubs and W2 forms (if you’re self-employed). The more recent these documents are, the better! In addition to your employment info, lenders may also request information on other sources of income that you have access to such as rental property or investment income such as dividends from stocks or mutual funds.
Keep in mind that some lenders require proof of your ability to handle credit responsibly by making timely payments on bills every month. This can help by showing them that you are responsible with managing money in general and will likely be able to pay off a loan quickly after getting approved for one!
Submit your application.
Once you have chosen the lender and are ready to submit your application, you will need to provide a number of documents. These include:
- Your credit report from all three credit bureaus (Equifax, TransUnion, Experian) for a total of three reports.
- Your income and employment details for the last two years along with proof of income such as pay stubs or W-2 forms. You may also want to include tax returns if they are available during this period as well.
- A copy of your automobile title so that they can see what kind of vehicle you own and how much it is worth when determining how much money they can lend you over its value should there be any issues down the road such as repossession or selling it at auction due to defaulting on payments.
Approval and disbursement of the loan amount
After the lender approves your application, it will disburse the loan amount. The lender will send you the documents which need to be signed by you and returned back to them. Once all the necessary formalities are complete and your application is approved, you can get a new car!
The approval and disbursement process
Once you have submitted the necessary information to the lender, they will review your credit report. They will also verify your income and employment by requesting pay stubs or transcripts from a school you may be attending. They will check to see if you are current on any other bills, such as mortgages, car payments and loans.
If everything checks out and all of their requirements are met, then they can proceed with approving your loan. The funds for this approved loan are sent directly to the dealer so that they can purchase back the car from them at their current value minus whatever amount is owed on it. By way of principal or interest payable according to terms set forth in our contract with them when we first took possession of it during those heady early days of ownership.
- The refinance process should be easy and hassle-free as there are no physical documents exchanged between the borrower and lender.
- You can do the refinance process from your home, office or mobile.
Refinancing your auto loan is a great way to save money, but finding the right company can be difficult. In this blog post, we’ll cover all the steps you need to take in order to refinance your auto loan and get a better rate. We’ll also provide some tips on how to find the best lender for your needs, as well as what to expect from them during this process.