Yahoo Autos Can you refinance a car loan?
If you own a home or are in the process of buying one, you’ve probably heard the term refinance. Refinancing can mean different things depending on who you’re talking to, but the basic concept is that you’re replacing one loan for a home with another that has different terms. The lender pays off the old loan, and you begin making payments on the new agreement. What you may not know is that refinancing can also be a great way to cut your monthly car payments, though there are several things you’ll need to keep in mind as you proceed.
Refinancing Car Loans: How it Works
Cars, like homes, come with long-term loans that let you pay them off over a period of years. Though auto loans are stretching longer as time goes on and vehicles become more expensive, the loans are generally between three and six years long – far shorter than a mortgage on a home. Even though the term is shorter than the loan you took to pay off your home, you may still find a situation in which you’ll be better served with different loan terms.
It's completely possible to refinance a car loan. Banks and credit unions are generally happy to help you refinance if your credit is in line and the vehicle’s condition and value are solid. You might even be able to refinance with the same lender, though it always pays to shop around. Applying to refinance a vehicle is similar in process to getting the original loan, and you might be required to provide a credit background, employment verification, or other identifying documents.
When you Refinance a Car Loan what Happens?
Once approved, your new lender will pay off the old loan, even if it’s held at the same bank. You’ll stop making payments on the old loan and pick up paying on the new one under the revised terms. Though your original loan gets paid off during the process, you still won’t own the vehicle, as the title will be held by the new lender.
