Tips on Refinancing your Used Car
If you bought your used car when loan interest rates were high, you probably are paying up to $100 more each and every month for your car, and all the money is going towards interest, nothing else. With a simple car refinancing application you can put that money back in your pocket.
Apply for an Auto Refinance to lower your used car payments by as much as $100 every month! That's $1200 a year you would have spent on interest alone. It all depends on how high your interest rate is, and when you choose to do your car refinancing.
When Can You Refinance a Used Car?
The interest you are paying on the bank loan for your vehicle is negotiable, especially when your credit score has improved, or interest rates have dropped. One lender to check out first is HSBC Auto Finance, the trusted leader in car refinancing. They can help lower your monthly expenses with a car refinance today.
How Car Refinancing Works
When you refinance your car, you are simply switching banks, and turning over the title and balance of your loan to a new bank. When you bought the car, a bank or financial company paid the dealer the amount you negotiated with the car dealer, for the car. When they did this, they took on risk, the risk that you would not be able to make the monthly payments every month. In that case, they would take back the car under a reposession.
When you refinance a car you are resubmitting all your financials to another bank, in hopes that they will take on the "risk" of lending you the money for your car. This new bank will pay off the remaining balance on your first car loan, and then issue you a new set of payments.
Why Refinance?
It can save you money, that right now is simply going towards interest. If your credit has improved you can:
> Get better terms on your car loan
> Benefit from better customer service and perks, like the possibility of skipping a payment
> Save money every month with a lower monthly car payment
> Earn more equity in your car, and get more money toward your next one when you trade your car in
Auto Loan Approvals - Bad Credit is No Problem!
What Does it Cost?
Many banks will charge a fee to refinance your ride. This fee is called a closing cost, or similar. This can be a percentage of the loan amount, or a flat fee that covers administration costs and gives the bank an incentive to refinance you.
When you refinance, always be sure you consider this cost. It may be very small compared to the savings you will gain with lower monthly payments.
How Can I Refinance My Used Car?
Contact a few lenders and ask them about their refinancing options, or click here. There are several banks and lenders that offer car refinancing. In fact, many banks simply do car refinancing. These banks probably will give you a better deal, since they are very good at financing cars.
Why Is My Current Rate So High?
Your current car loan monthly payment is probably high because your credit score was low. This means you are a risk in the eyes of the bank, so they charged you a higher interest rate to protect their invesment. This interest rate could be as high as 20% or more. That means almost all of your car payment goes toward the interest on your loan. That's why a refinance is a good option. If your credit score has improved, you could be eligible to lower this rate significantly and cut your payments dow substantially.
How Do I Know if My Credit Score Has Improved?
That's simple, you can check your credit score at any of the three credit bureaus. Or, get a free report.
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How Does a Bank Calculate Your Car Loan Interest Rate?
A bank calculates your interest rate using several factors. First is your credit score. This is the most important. A credit score that changes by 100 points can qualify for as much as a 10% decrease in the total car loan interest rate, if you are paying 20% or more for your loan. Reducing the interest rate on your car loan from 20% to 10% can result in a very large savings. On a $15,000 car, that savings could be as much as $75 a month, depending on your loan terms.
A bank will also consider the value and price of your car when they calculate interest rates, or decide to approve your loan. A bank may not grant a loan to a car that is overpriced, that's why checking the price of your car is so important.
Check KBB values
Check NADA values
Then search several car dealers for local used car prices. It's easy and will save you hundreds of dollars a month in payments on overpriced cars.
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Which Banks are best for Refinancing a Used Car?
There are several banks that offer refinancing, so it is hard to say which ones are best for you. Each one offers different terms. The best way to begin is to get your credit score, then decide if you have good or bad credit. If you have bad credit, (below 500) a low credit or no credit lender might be a good option. If you good credit (over 650) then any major lender is your best place to look for a used car refinance. Medium credit (500 to 650), should try to do a search online at one of the major auto loan sites, because these sites typically target medium credit risk buyers, and since banks know they have competition, they will offer great rates, and easy refinancing.
Refinancing Your Car When Your Credit Has Improved
When you credit score has improved, you should refinance your car, because you will save money on your car payments every month. If your credit score has increased by 50 points or more, shop around for a new car loan, and get some quotes, then refinance as soon as possible, so you can start saving right away. Get started by refinancing right now. HSBC Auto Finance is the trusted national company that can help with your auto loan refinance. Apply Now.
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