Reducing your car payment might provide the extra money in savings you need and refinancing is the way to do it. Refinancing can change the term and the payment amount on your car loan, an important fact to keep in mind. The challenges are finding a reputable bank to refinance the loan and understanding the terms of the agreement. You will need to understand prepayment penalties, GAP insurance and other coverage features.
Reivew Current Loan Documents
Review current auto loan documents. Understand the prepayment penalties (a financial penalty for paying your loan before the term), if any apply. Contact the lender to request a payoff balance on your loan. The payoff is the amount you owe before you can get out of the loan. The payoff balance is valid for only a certain period of time. If you do not act within that window you will have to get another balance. The payoff balance is not the same as the amount you owe on your loan statement. Your loan statement does not include processing or closing fees.
On Time Payments
Your credit profile falls into two categories: either you've been paying your payments on time or you haven't. If you've paying on time, you have more options at your disposal. Contact your current lender and ask if they would consider refinancing you to a lower rate based on your payment history. Allow them to provide a rate first. If an online offer is less, request the lower rate. Shop for rates on Bankrate.com or RateGenius. These are both reputable online resources which serve as online marketplaces for financial institutions advertising refinancing rates. Then go to your local bank or credit union and ask them to explain the difference between the lowest rates found online and their rates.
Late payments
If you haven't been paying on time, your options are more limited, however, you can still request a refinancing based on your current situation. If you can prove a source of income in the near future, most lenders will approve a deference of your payment amount for up to 3 months. Don't rule out refinancing online. While it may result in a higher rate, the payment structure may be over a longer period of time causing the monthly payment to decrease. Watch out for loan and title fees. These fees aren't always disclosed so you need to request a breakdown before making your final decision.
0 comments:
Post a Comment