If you wish to lower your monthly car payments or cut down on the total interest you’re paying on your car loan, you’ll need to know what it means to refinance an auto loan and when it makes sense for you to commit to the process.
The process of refinancing an Arizona car title loan is essentially replacing the existing auto lender with a new lender. This means you’ll need to change the name of the company on the title of your vehicle, which is the document that proves official ownership. You’ll continue to make payments to the new lender until you’ve fully paid off your vehicle.
There are some benefits to refinancing an auto title loan, but before you look into whether or not it will be a good idea for you, it’s important to make sure obtaining quotes won’t be listed as a hard inquiry on your credit report. Hard inquiries can damage your credit score in some cases.
What do lenders look at?
When you actually apply for the refinance, the lender will look at your overall credit profile, as well as the make, model and mileage of your vehicle, to determine the kind of rate you can get. They’ll also look at your vehicle’s value relative to how much you still need to pay off on your existing loan.
Lenders will look at the number of payments left on your current auto loan to determine if it’s in the interest of both parties to refinance. You’ll generally need at least a few months to demonstrate you have been making payments on time. After that, the more recent your loan, the more financing will potentially save you money. This is because refinancing is generally performed to cut down on the amount of money you’ll have to spend on interest, and you pay interest early on in the loan before you really start to cut into the principal. You can determine exactly what you’re paying and when during the life of the loan by analyzing the amortization schedule of your loan.
After you get your refinance rate, you should then analyze it to see if the rate offered will allow you to meet your financial goals. Make sure you fully understand any additional fees or prepayment penalties that might apply to the new loan so you can get a better look at the costs and understand which loan schedule will be better for you.
In addition, remember that you’ll need to gather up certain documents to refinance your loan, including registration and insurance information. After everything is approved, you may also be asked to complete a power of attorney document so you can transfer the title from your old lender to your new one. Your new lender will pay off your previous lender, and will then become responsible for your loan.
For more information about your options with regard to refinancing loans, including Arizona car title loans, contact the team at Cash-N-Go Auto Title Loans of Phoenix today.