How to Refinance a Vehicle With a Down Payment Required

If you want to lower the interest rate on your vehicle's loan, refinancing can help you save money by paying off the old loan and getting a new one with better terms. However, when you go to refinance, you might find that your car is worth less than you owe on the loan and the lender is not willing to refinance because the loan will not be fully secured by the car. In this case, the lender might require that you make a down payment on your refinance to get the loan balance to less than the value of the car.

Instructions

1

Look at your most recent loan statement on your current vehicle loan to determine the remaining balance left to pay.

2

Enter your car's basic information into a website that specializes in used car values, such as NADA Guides, Kelley Blue Book, Edmunds or Auto Trader. Search for its private party value, which is the best estimate of how much it is worth on the market.

3

Compare the car's value to the outstanding balance on your loan. If your car is worth more than you owe, you will probably not need a down payment and can proceed with the refinance process without worrying about the payment.

4

Contact a lender for auto loans and ask about refinancing your vehicle. Tell the lender the outstanding balance and the car's value and ask how much of a down payment you would need to refinance.

5

Save up money over the next few months so you have the down payment you need. Some ways to save include eating out less frequently, avoiding consumer purchases as much as possible and getting more hours at work to increase your income.

6

Contact the lender again when you have saved enough money and follow the lender's instructions to apply for the vehicle loan. Depending on the lender, you might give the down payment you saved up directly to the lender or you might use it to pay off a significant chunk of your old loan just before refinancing.