Can I Get a Blue Book Value Using a VIN Number?

The "blue book value" of a used car is a reference to "Kelley Blue Book." Published since the 1920s, the "Kelley Blue Book" has long been the go-to source to determine the value of a used car. You can even use the VIN, or vehicle identification number, of a car to determine the Blue Book value. These numbers, which have been assigned to every individual car since 1980, were standardized to keep people from trying to sell a car as one make and model when, in actuality, it was another.

Locate the VIN Number

Locate the VIN number for the vehicle you're trying to appraise. This number is located on a number of different surfaces of the car, but the easiest place to look for it is stamped to metal tag fastened to the inside of the dashboard, right where the windshield meets the hood. The VIN is also located on the engine block and sometimes on the inside of the driver's side door. If you have any paperwork for the car, such as auto loan or insurance papers, these will also usually have the VIN.

Determine Make and Model

Use a free VIN service, such as Motoverse (see "Resources") to find the model and make of the car from the VIN. Note that this will not work for pre-1980 model cars, as that was before the VIN system was standardized throughout the world. Many auto manufacturers will also encode more specific information into the VIN, such as the engine type, any kind of safety features and where the car was manufactured.

Examine the Car

In order to accurately get a price from the Blue Book, you'll need to ascertain the condition of the car. The Blue Book rates cars on a scale ranging from poor, fair, good and excellent. The better the rating, the more the car is worth. One way you can do this is by checking the accident history of the vehicle. There are a number of online vendors that will tell you if the car has ever been in an accident by running a check on the VIN.

Determine the Car's Blue Book Value

Once you have the make and model number, you can plug it into the "Kelley Blue Book" site (see "Resources") to determine the Blue Book value of the car. If you were able to determine any other details about the car from the VIN, such as the engine type, plug these options into the Blue Book webform. This will help you get a more accurate value for your car.

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The Best Way to Buy a New Car

If you're in the market for a new car, then there are some things you can do to ensure that your buying experience is a good one. After all, you'll be driving your new car for several years; therefore you might as well invest the time to make certain that the car you buy is the one you really want.

What is the best way to buy a new car? That's easy--by following several important steps along the way. Please read on for some tips on how to make your next new car purchase a good one.

Determine What You Can Afford

What is your budget for a new car? How much money will you be putting down or will you be paying cash? If making payments, how much can you afford to pay out each month for your new car? Use an auto calculator (amortization rate calculator) to determine your exact costs.

Specify Your Needs

There are hundreds of make/model choices out there for you to consider when shopping for a new car. Sedan, coupes, wagons, roadsters, crossovers, minivans, SUVs and pickup trucks are just some of the passenger vehicles on the market. While logic may have you looking at one type of vehicle, your emotions may have you pining for something else.

Buy the car you want to suit your personal needs, taking into consideration your driving habits, gas mileage, insurance costs, parking, and other factors deemed important to you.

Narrow It Down

Once you determine what kind of vehicle you want, then narrow down your choices to three or four competing models. For example, if considering a full-size pickup truck, you'll quickly see that the Ford F-150, Chevy Silverado, GMC Sierra, Dodge Ram, Toyota Tundra and Nissan Titan occupy that market. Read reviews of each truck and test drive those which are of interest to you.

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Things to Do Before Buying a Car

The car you buy can have a major impact on your finances, the quality of your driving experience and your personal safety. Many car buyers end up overpaying for their vehicles or get cars that do not fulfill all of their needs. There are several steps you can take to help ensure you get as much as possible out of your car before committing to a purchase.

Get Pre-Approved for a Loan

Many car buyers have to borrow money to afford their vehicles. Car dealers often offer financing options, but the interest rates they offer may not be as low as rates you could get from third-party lenders. Before you go to a dealer to buy a car, seek approval for a loan from a credit union or bank. According to CNN, getting pre-approved will put you in a better position to negotiate with dealers and will likely result in owing less interest unless the car manufacturer backs special low-rate financing.

Decide What You Need out of Your Car

You should know all the features you want out of your car before going to the dealer and shopping for a car. For example, if you need to use the car for a long commute, you might benefit from buying a car that has high gas mileage. If you live in a region with harsh winters, you might prefer a car with four-wheel drive. When you know all the features you want ahead of time, it will allow you to zero in on a car that meets your needs more quickly.

Determine How Much You Can Afford

Prospective car buyers should figure out how much they are willing and able to spend on a car before entering into any sort of negotiations. If you already carry a variety of debts like student loans and a home mortgage, you should make certain that the cost of a new car will not be financially burdensome. For many drivers, buying cars used is more economically feasible than buying brand new cars. If you are going to a dealer to purchase a specific car, set a maximum price you are willing to pay for the vehicle and do not go over that price during negotiations.

Inspect and Test Drive the Car

It is imperative that you inspect and test drive a car before buying to make certain it meets your needs and that it is comfortable to drive. This is especially important when buying used cars as problems with cars may not be apparent without a close inspection and a test drive. You may benefit from bringing a friend or family member along for a test drive, and an inspection may help you to assess problems, performance and comfort.

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How Do I Take Possession of a Vehicle Someone Abandoned in My Driveway?

Finding an abandoned vehicle in your driveway can be a real nuisance, especially if you dont know whom the vehicle belongs to. Once the car has sat in your driveway long enough, you may wish to take possession. However, just because the car appears to have no known owner and is on your property, the proper legal channels must be followed before possession can occur. Each states has their own laws and regulations regarding abandoned vehicles. Contact your state's department of motor vehicles or police department to inquire about abandoned vehicle and title transfer laws.

Instructions

1

Write down the vehicle's license plate number or Vehicle Identification Number, also known as the VIN number. Most VINs can be found on a car's windshield or the inside of the driver's door. If the car is unlocked, locate the insurance or registration. The VIN should be printed on both documents.

2

Contact your state's department of motor vehicles to inquire about the owner of the abandoned vehicle if you don't know who it is. Supply the clerk with the license plate number or VIN.

3

Inquire with the DMV about car title transfer laws and lien holder regulations. If the owner of the abandoned vehicle agrees to sell or gift you the car, there may be specific-state required documentation that must be submitted to the DMV before the sale or gift can occur.

4

Contact the owner about taking possession of the vehicle. Ask whether the owner wants to sell the car to you or send you the title. If he wishes to do neither, call your local police department or towing company to have the vehicle removed. If the owner agrees to sell you the car, you must first inquire about any liens against the vehicle. In most states, the liens must be removed before a title transfer can occur. Liens can be removed by anyone who pays them off. Contact your local DMV for your state's laws.

5

Attend the police, city or tow company's auction where the car will be sold if the vehicle was towed from your property. In most states, the party towing the vehicle will contact the owner of the abandoned vehicle. If the owner does not respond, or simply gives up his rights to the vehicle, the towing party will auction the car. Ordinary citizens may bid on the car and other seized property. Check with the auctioning party about payment options. Most auctions require that you pay the full bid amount at the time you take possession.

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What Are the Consequences of Vehicle Repossession?

Not paying your automobile loan for several months will prompt your lender to repossess the car. Lenders do work with borrowers, and if unable to make a payment, they may renegotiate the terms of your agreement or allow you to skip a month. But if money problems continue and repossession becomes inevitable, the consequences of a repo can last for years.

Credit Report

Within months of repossessing the automobile, your lender will send a notation to the credit bureaus and include this entry on your credit file. Repossessions are serious, and this remark remains on your report for a duration of seven years. Any lender or creditor reviewing your credit report in the future will see this information, which makes it harder to acquire a new car loan. If you are approved for a new car loan, the lender will charge high finance fees because of your high-risk status.

Credit Score

A repossession on your credit report makes it difficult to get other types of credit. Mortgage companies, banks and credit card companies may hesitate to approve your request for financing due to a drop in your credit score. If applying for employment with a bank or other company in the finance industry, a low credit score and a past repossession can prevent you from getting the job. These types of employers and some insurance companies review credit histories before offering candidates a job or writing an insurance policy.

Unpaid Debt

Having a lender repossess your car doesn't end the ordeal. They'll sell the car at an auction to the highest bidder. If the auction sale price isn't enough to cover the entire car loan balance, lenders will come after you for the remaining balance. Deficiency judgments are common with foreclosures and car repossessions. Your auto lender may sue you for this money, and place a judgment on your credit report if you cannot pay.

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New Vs. Used Car Interest Rates

Interest is the price you pay to borrow money. Both new and used cars often cost too much for the average buyer to pay in a lump sum. Various sources provide the money and offer payback terms of anywhere from 24 to 72 months or longer, although CarsDirect warns that lengthy loans often leave you owing more than the vehicle is worth. Interest rates differ for new and used autos.

Comparison

New car interest rates are generally lower than the rates for used car loans, said Eric Evarts, a Cars.com writer. For example, DataTrac Corp. reported that the average 36-month new car loan from a bank was running nearly half a point lower than used car financing for the same term in January 2011. New cars sometimes qualify for promotional rates, which may run as low as zero percent. Evarts said that dealers do not run such specials for used cars.

Sources

Both new and used cars are financed through various sources, such as banks, credit unions and lenders found through the dealership. Credit unions are often the best source for low interest rates, said MSN Money columnist Liz Pulliam Weston. For example, credit union 48-month new car loan rates are about 1.5 percent lower than banks' rates, and used car financing is almost 2 percent cheaper. Dealerships tend to give the highest interest rates because they get wholesale quotes for loans, then mark up the money to make a profit for both new and used vehicle financing, Evart said.

Qualifications

Both new and used car interest rates are higher for buyers with past credit problems. Lenders offset some of their risk by charging more for the loan. You may have to accept more expensive financing if you have delinquencies, collection accounts, bankruptcy or other negatives on your credit reports, according to Edmunds.com in a story by Content Editor Warren Clarke. You can usually refinance your loan within a year or two at a more attractive rate if you rebuild good credit. Focus on on-time payments on the car loan and all your other bills, as the MyFICO credit scoring site identifies this as the most critical factor in restoring your score.

Considerations

Car research websites report on special new car financing deals, as well as other incentives like rebates and promotional dealer cash. Zero percent loans and other highly attractive deals usually require a very good credit score. You usually get an alternative incentive, like a rebate, if you do not qualify for the promotional finance rate.

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Can a Personal Auto Loan Be Tax Deductible?

The IRS eliminated the tax deduction provision for interest on most personal loans including auto loans. As with most any change in tax regulations, savvy lenders have figured out a way to get around that restriction, offering a loophole involving your most expensive asset: your home. Borrowing money should always be undertaken carefully, especially when you offer your home as collateral.

Home Equity Loan

If you take out a home equity loan, you can mortgage interest on your federal tax return. These loans are based on a percentage of the equity in your home, with banks limiting the amount of money you can borrow. What banks do not limit is what you do with that money, funds which can be used to make home improvements, repairs, consolidate debt, spend on a vacation or to buy a new car. You can use your home equity loan for one or more purposes.

Tax-Smart Loans

Some lending institutions offer home equity loans by a different name including so-called tax-smart loans. These kinds of loans are used for the purchase of a car and may help you avoid the usual time expended and closing costs paid out with a home equity loan. Under this lending arrangement, the bank knows that you borrowing money to purchase a car and will put a lien on your car and on your house. Compare the interest rate you pay for this kind of loan because it may be higher than the going rate for home equity loans.

Deductions

The IRS allows taxpayers who itemize their tax returns to deduct home mortgage interest on Schedule A. The lenders for your mortgage and for your home equity loan must send you separate Form 1098s, reflecting your total interest paid to them for the year. Add those amounts together and put that total on line 10. You will be adding home interest payments with your other deductions to tabulate your total itemized deductions. That total is reflected on line 29 of Schedule A and transferred to Form 1040, line 40, an amount which can decrease your tax obligation.

Warnings

Taking equity from your home can put your home at risk if you cannot meet payments. The first or primary mortgage and your home equity line or secondary mortgage means that there are two liens on your home. If you default on either loan, then your home can be foreclosed. If your home equity loan is written as a tax-smart loan, you could also lose your car. Contact a tax advisor to determine the best financing option for you.

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How to Remove Yourself as a Cosigner of an Auto Loan

A co-signer of another persons auto loan may eventually want to be relieved of that agreement. If you are a co-signer and apply for your own loan, a lender might decline the request based on your high debt-to-income ratio. Removing your status as a co-signer lowers your debt ratio, which can result in a loan approval and increase your purchasing power.

Instructions

1

Review the loan agreement for a co-signer release clause; the document may indicate if you are eligible to remove your name. Co-signer release clauses permit co-signers to take their name off the loan once the primary signer makes on-time payments for a set number of months. If you do not have the agreement, contact the lender to see if it will remove your name.

2

Ask the primary borrower to refinance the loan and, in the process, remove you as co-signer. If the lender does not allow co-signers to take their name off loans, contact the primary signer and express that you want your name taken off the loan as co-signer. The primary borrower must refinance the auto loan to release you from the obligation; this requires him to apply for and be approved for a new auto loan. A lender will check the borrowers credit score and income before making a decision.

3

Confirm that you are no longer a co-signer by checking your credit report. If the primary signer qualifies for a loan on his own, the new auto loan supersedes or pays off the original one. Check your credit report after a couple of months to confirm that the original loan -- the one for which you co-signed -- is paid. Get your report from AnnualCreditReport.com.

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How to Get a Husband Off a Loan Without Refinancing

If you don't want to refinance your loan, but you want to remove your husband as a co-signer, ask your lender to modify your loan contract to do so. Your lender doesn't have to agree to do this. Your original loan terms, including interest rate and depreciation based on loan terms, were made in consideration of both your credit and that of your husband. Also, if your lender agrees to remove your husband from the loan, your rate or term might change, resulting in a higher monthly payment.

Instructions

1

Contact your loan provider and discuss your account with a representative. State that you want to remove your husband from your auto loan and ask about your options. Your lender might ask for proof of hardship or divorce or ask for a credit application to determine your options for loan modification.

2

Provide the lender representative with your credit and income information. Mail, fax or drop off any proof of income, hardship, separation or divorce if your lender requests it.

3

If your lender approves your loan modification, arrange to sign your new loan agreement in person or by mail. Discuss any loan changes, such as term, interest rate and monthly payment, before signing it.

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What Happens After a Vehicle Is Repossessed?

Vehicle repossession can be a frightening experience for a struggling borrower. In the event that a car note goes unpaid, the lien holder has the right to repossess the vehicle and recoup its losses. When a repossession company shows up to take the vehicle, it is wise to be agreeable and hand over the keys, and ask for contact information for the person who ordered the repossession and where the vehicle will be stored. A legitimate repo company will give you this information, and will usually let you remove personal items from the vehicle if you are being cooperative.

Storage

A repossessed vehicle is placed in a secure storage area for a predetermined amount of time, usually around seven days. The plates remain on the vehicle, and it remains in your name, which means you must keep your insurance active.

Contacting the Lien Holder

During the storage period, you will be given the opportunity to pay any amount that is in arrears as well as towing and repossession fees. If you are able to pay the full amount, you can retrieve your vehicle. If you cannot come up with the money, then the next step in the process begins.

Auction

If a person can't pay what is due, the lien holder may auction the vehicle, which now belongs to the lender, along with any stereo equipment or other accessories installed by the borrower. Some of these auctions are public, and some are held privately for car dealers. At this point, all you can do is hope the auction brings a high enough bid to cover what you owe. When the car goes to auction, your tags are returned to you and you can cancel your insurance.

Remaining Balance

Any balance remaining after the car is auctioned is your responsibility.

Future Purchases

A vehicle repossession will show on your credit report, but the lien holder can work with you. If you have set up a reasonable payment arrangement for the balance and are honoring it, they can mark it as an account in good standing; if you refuse to pay or cause problems, on the other hand, they can list it as a bad account, which will prevent you from getting an auto loan for a very long time. The lender can also turn the account over to a collections agency, which will put more bad marks on your credit report. Cooperation is key to surviving a vehicle repossession with some of your credit intact.

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What Is Average Rate on a Car Loan?

Interest rates for automobile loans do vary significantly based on the amount borrowed, credit score of the borrower, location and other factors. That said, while the base interest rates offered by banks and other financial institutions for auto loans do tend to be pretty similar across the country (although there is some regional variation), it is differences in how banks analyze individual credit risk that represent most of the variability in rates.

Current National Auto Loan Rates

According to Bank Rate, the average interest rate on a 60-month new car loan is 6.19 percent, and the average rate on a 48-month new car loan is 6.22 percent. The average rate for a 36-month used car loan is 7.18 percent.

Better Credit Means a Lower Interest Rate

Your credit is the most significant factor in the interest rate on your auto loan. A credit score above 680 generally gets you access to the best rates, which can be half of the rates paid by those with poor credit.

Highest and Lowest Available Auto Loan Rates

Some auto dealers are offering zero-percent interest loans on certain models, but make sure to read the fine print as sometimes the rate increases after two or three years. Even in a low-interest rate environment, borrowers with poor credit are still paying double-digit interest rates in some parts of the country.

Credit Unions Usually Offer the Lowest Auto Loan Interest Rates

In turns out that credit unions are usually the best place to get an auto loan. According to Cars.com, credit unions offered an average used car loan rate almost 1.5 percent lower than banks in 2009.

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Paying a Car in Full Vs. Making Monthly Payments

Major purchases, such as a new car or home, often demand your time and research to ensure you are making a sound investment decision. The decision to use cash for your purchase instead of applying for a loan has pros and cons when buying a home, but when purchasing a new car, very few drawbacks exist for buying a car in full versus making monthly payments.

No Interest Payments

Borrowing money is never free. Lenders solicit borrowers with the hope of attracting a qualified borrower who can afford to repay a loan with interest. The amount you pay in interest can equal twice, sometimes three times, the value of a car depending on your credit rating. If you pay for a car in full, you make zero interest payments on your car. The price you negotiate with the dealer is the final price on the car.

No Credit Exposure

Many people hope for perfect credit to get the best interest rates and terms on loans. Paying for your car in full requires no credit check. The downside to not having a credit risk is that you also don't have the opportunity to build your credit score as you make timely payments on your vehicle. Payment history is the largest factor influencing your credit score each month.

However, if you experience a financial emergency and find yourself struggling to pay your monthly bills, a car payment will not be on your list of worries if you pay for the vehicle in full. Falling behind on car payments due to financial hardship can damage your credit score if payments are made later than 30 days beyond the due date.

Mitigated Loss in Equity

Cars are often not considered assets because they depreciate very quickly. With added interest and fees on a car loan, you can end up "upside-down" on a car loan as soon as you drive off the lot. Paying in cash helps mitigate your loss in equity when you purchase a car. You can't prevent the value of the car from depreciating, but paying only once for the car means you are not losing money that could be used towards keeping the vehicle in top condition.

Budget Free

When you pay for a car in full, there is no payment to budget around. Depending on the type of car you purchase, your car payment can be costly. The money you would apply towards a car payment can be used towards investments, emergency savings or leisure activities. Lenders generally check your debt-to-income ratio to determine whether you can afford to pay for the car, but when it is paid in full your income and household budget are not a consideration.

Considerations

Paying for a car in full to free up your monthly budget is a good idea if the money to pay for the car is not coming from an emergency savings account or investment. Investment accounts such as 401k and IRAs may have substantial cash to cover the costs of your new vehicle, but tax penalties can be costly. Consider where the money is coming from before making a large purchase that could cause a significant financial setback.

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How to Refinance Your Car with Bad Credit

When seeking an auto loan with bad credit, it pays to be realistic. Although an auto loan is secured debt, and thus the easiest kind of credit to get, it can still be difficult to get approved. If you are approved, it can be difficult to get terms that are superior to what you already have. Although this process can be frustrating and require multiple attempts, it can save you hundreds or even thousand dollars in interest over the course of your loan.

Instructions

1

Research the current value of your car on Kelley Blue Book or Edmunds. Most banks will not refinance if you owe more than a certain percentage of the car's value. The specific percentage will vary according to how bad your credit is.

2

Save a little money. Paying down the amount you owe may be the only way to reduce the loan value to a point where banks will refinance your loan. Don't pay down until you know what your bank is willing to finance, but be prepared to do so. You can consider it a sort of "down payment."

3

Check your credit report. Take action to clean up any open complaints and be prepared to discuss all items on the report. Some loan officers will be willing to take an extra risk for people who can cogently answer to all the issues on their report.

4

Talk with the loan officer at the bank where you have your regular accounts. It costs much more to attract new customers than to keep existing ones. This means your bank will most likely go the extra mile to get you a loan. This may mean agreeing to allow it access to your accounts if you miss or are late with a payment.

5

Contact an auto dealer who specializes in bad credit car loans. Ask for the names of the banks they do business with. Work your way through those banks one by one.

6

Consistently work to improve your credit throughout this process. Put your bills on automatic payment so you never forget to pay on time. Pay down your credit card balances to establish a better ratio of debt to limit. Work to change unhealthy spending habits. If you keep doing this, every month that you don't get refinanced makes your credit more attractive to the next lender you approach.

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When You Trade in a Car for a New Car What Happens If You Owe More Than the Car Is Worth?

If you owe more than your car's value, known as being upside-down on your car loan, the dealer you trade with must pay off your vehicle loan to take ownership of your trade-in. Any additional money you owe toward the loan after the dealer's offer is rolled over to your new car's purchase price.

Dealer Payoff

Expect your dealership to appraise your vehicle and offer a price. The dealer will also call your lender to get your vehicle's payoff amount, which it must pay in full to complete the trade process. The amount of money you owe toward your loan after the dealer's purchase price is added to your new car's purchase balance. For example, if you owe $12,000 on a vehicle that is worth $10,000, the dealer will still pay your lien holder $12,000; the additional $2,000 goes toward your new car's total purchase price.

Tax Savings

Most states offer a tax deduction for trade-in vehicles. If you purchase a new car for $15,000 and have a trade worth $10,000, you are taxed on $5,000 instead. In areas with higher tax rates, your savings can prove substantial depending on the value of your trade-in. Your tax savings can help to decrease your total purchase price. If your tax rate is 10 percent, a trade-in vehicle worth $10,000 saves you $1,000 in tax charges. In this example, you are actually carrying over $1,000 to your new purchase because of your tax savings.

Down Payments and Rebates

You can offer a down payment toward your new purchase to prevent carrying over money to a new loan. You do not have to pay it to your lender. If you attempt to pay your lender to decrease your loan payoff, it can take up to a week before the loan payoff reflects your payment. Pay your dealer instead. If your dealer is offering a rebate, you may be able to use it to cover your negative equity completely. A rebate is an automatic cash discount off of your new car's sticker price. Rebates act as a down payment, so you may not have to provide one at all.

Gap Insurance

If you can't afford a down payment to decrease your negative equity, you may still obtain a loan approval depending on your credit. Most lenders require a full-coverage insurance policy until a loan is satisfied. Your insurance company's payoff has nothing to do with your loan value. If you carry over money to your new loan without providing a down payment, expect to remain in a negative equity position. Gap insurance, which you can purchase at the time you initiate your loan, pays for the remainder of your loan if you should incur a loss; your insurance policy pays your lender for the car's market value. Consider purchasing a gap insurance policy to eliminate your financial responsibility in the event of a loss.

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Tips to Save Money in Financing a Used Car

Loans for used automobiles often have higher interest rates than new vehicles. Higher interest rates on an auto loan increases the monthly payment. However, even with a higher auto loan rate, there are ways to ensure that you receive the best financing deal possible on your new used vehicle.

Get Your Credit Score

Getting a prime or low rate on a used vehicle loan will save you money throughout the life of the loan via lower monthly payments. Lenders will finance you if you have a low credit score, but the consequence of a bad credit rating is a higher interest rate. A credit score above 680 gives you access to the most competitive finance rates available. Order your credit score from MyFico.com, and if your score falls below the prime category, improve your credit before buying a used vehicle. Boost a low score by paying bills on time and reducing your credit card balances.

Finance Term

Car buyers typically prefer keeping their monthly payments as low as possible; therefore, they may opt for five-year, or 60-month, financing. However, a loan term of 24 or 36 months brings down the interest rate on the vehicle loan. If you can afford the higher monthly payment, you're able to pay off the vehicle loan early.

Co-Signing

A co-signer on your used vehicle loan application helps you get approved if you have a low credit rating or not enough income to qualify for the vehicle loan. Co-signers have legal responsibility for the vehicle, but ultimately, it's your responsibility to make the payment to the lender each month. However, if you lose your job or can't afford the payment, your co-signer steps in and assumes responsibility for the vehicle loan.

Down Payments

Cars depreciate rapidly. If you're involved in a serious accident that damages the car, or if someone steals the automobile, your insurance company will pay only what the vehicle's worth. In order words, if you owe the auto lender $13,000, but the car is only worth $10,000, you'll have to pay your auto lender $3,000 out of pocket to pay off the vehicle loan. Making a down payment of 10 percent or more on your used car helps alleviate owing more than the vehicle's worth, and it can help you get a better finance rate on the loan. If you can't afford a down payment, consider gap insurance. This extra insurance compensates for the difference.

Finance Options

Honest dealers and auto finance companies often try to do everything in their power to help you acquire a low finance rate on a used car. However, some auto dealers pad or increase the interest rate in order to increase their bottom line, says Cars Direct. Securing your own financing by going to your bank or credit union helps you avoid this type of scam. If you like, get a quote from the dealership's finance department and then compare this quote with your personal bank.

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What to Look for When Buying Used Vehicles

A well-maintained used car can be a good deal for people who don't want to spend thousands of dollars on new cars that immediately drop in value after purchase. Savvy consumers have a used car checked out by a mechanic to determine the condition of the vehicle. However, there are several things buyers can look for themselves to size up a vehicle's condition.

Exterior

A thorough check of a car's exterior can reveal body repairs that may indicate the vehicle was involved in a collision. A Consumer Reports article titled "How to Spot a Lemon" says a Certified Automotive Parts Association (CAPA) sticker on a vehicle body panel indicates the panel has been replaced. Paint spray in the wheel wells or on chrome or rubber trim also is a sign of body repairs. A misaligned door, hood or trunk may have resulted from a collision followed by improper repairs.

Interior

The appearance of a car's interior can reveal some things about its history. Extensive wear on the brake and accelerator pedals may be an indication that you're looking at a vehicle with high mileage, even if the odometer reading indicates it's a low-mileage vehicle. A mildew smell or traces of mud under the seats or carpet may mean the car has been in a flood, and it might have electrical problems as a result of being waterlogged.

Fluids

Look under the vehicle to check for fluid leaks. Examine the hoses under the hood as well to ensure they're not leaking. Stains on the lining of the hood may indicate a hose is or was leaking. Fluid leaks can cause a vehicle to malfunction, and the condition of the fluids can reveal whether a problem already exists. For instance, Consumer Reports recommends removing the dipstick from the engine to check the condition of the oil. The engine may be in poor condition if the oil looks gritty due to infrequent oil changes. A damaged engine also will emit metal particles into the oil.

Warning

In a test drive, take note of whether a car moves in a straight line on smooth pavement. A vehicle that consistently needs to be steered back to the center of a road may have a bent frame or suspension problem, which could lead to expensive repairs. Listen to the sounds the engine makes because they could reveal mechanical problems. A vehicle may have a faulty transmission if the engine revs when the car isn't accelerating.

Considerations

Consider buying a vehicle with a warranty that lasts at least 6 months, so you won't be immediately responsible for all potential repairs after the purchase. Certified used vehicles get mechanical inspections at some dealerships, and they usually have warranties that cover major repairs for a limited time. Edmunds, an automotive publisher, notes on its website that certified warranties can add $500 to $2,500 to the price of a used car. Another option is to buy a car that's less than 3 years old because it may still be covered by the manufacturer's warranty. New cars usually have warranties that remain in effect for at least 3 years or 36,000 miles.

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The Pros and Cons of Purchasing an Extended Warranty on a New Vehicle

Before you sign on the dotted line to become the proud owner of a new vehicle, you'll often be approached to purchase an extended warranty for the vehicle. Extended warranty coverage kicks in once the manufacturer's warranty expires. If you're not planning on keeping the vehicle long enough to see the manufacturer's warranty end, an extended warranty is not a wise buy.

Warranty's Issuer -- Con

If the extended warranty you are considering purchasing is offered by a third party -- not the manufacturer -- there's no guarantee the company will be around in several years when you need the coverage. If you invest the money up front to buy the warranty and the company no longer exists when you need it, you'll have made a worthless investment.

Coverage for Excessive Use or Long Term Ownership -- Pro

If you plan on keeping your car for five or 10 or more years, an extended warranty can be useful. Once the manufacturer's warranty runs out, you'll have the advantage of the extended warranty that can cover your vehicle's repairs. This is especially helpful if you plan on driving your vehicle excessively and racking up the mileage.

Exclusions -- Con

It's important to read the fine print when deciding whether or not to purchase an extended warranty. Some of these warranties exclude so many instances of repairs or replacement parts that the purchase price is not worth what you will receive in return. While many of these type of warranties won't cover car parts that can wear out many times over the life of the vehicle, such as batteries or mufflers, some of them will have more uncommon exclusions such as shock absorbers and brakes. Take the time to read the fine print and ask the issuer of the warranty if you have any questions.

Transferability -- Pro

Some extended warranties will end when you transfer the ownership of the vehicle, while others will not. Having an extended warranty in effect for prospective buyers can sweeten the deal -- especially if you are selling your vehicle privately and not trading it in through a dealer. Before you sign up for an extended warranty, ask if it is transferable.

Other Cons

Since extended warranties differ, it's important to thoroughly understand what the proposed warranty entails before you purchase. For instance, ask if you can take your car anywhere for repairs, or if there's only one or a few choices for repair work. In addition, many extended warranties require that you pay the expenses out-of-pocket and receive reimbursement later, which can sometimes take months. Some extended warranties offer a per-repair deductible, which can add up. You will have to pay the deductible amount -- such as $100 -- for each repair performed during a visit. It's probably better to opt for a per-visit deductible.

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How to Refinance a Truck

Owning a truck has several benefits, the most obvious of which is the truck bed that provides much more cargo area than cars or smaller vehicles. Buying a truck with an auto loan allows you to pay for your truck over an extended period of time, commonly up to five years. If your truck loan is difficult to repay or you think you can get a higher interest rate, refinancing your truck may save you money and extend your repayment period.

Instructions

1

Review your payment history and contact your current loan holder to find out the exact amount still owed on your truck. If you have made all of your payments on time then you are likely to get a better deal on a loan refinance, but you can still refinance even if you have some late payments. Checking your credit is also important, as it will show you how much your credit score has changed since you took out the original loan on your truck.

2

Contact the bank or other lender that holds your current auto loan and request a quote on a refinance loan. Explain to them your reasons for wanting to refinance, being upfront about having difficulties making your payments in full or simply wanting to save money. Do not apply to refinance at this time, since you just want a quote to see how you could benefit by refinancing through your current lender.

3

Visit other lenders that offer automotive financing and request refinance loan quotes from them as well. Don't forget to include online lenders in your search, as some online lenders are backed by nationally recognized banks and specialize in refinancing existing auto loans. Provide as much information as you can for an accurate quote without applying for a loan, and ask whether any fees or other charges must be paid during the refinance process.

4

Compare the loan quotes you've received, looking at the quoted monthly payments and interest rates. Take special note of any introductory refinance rates, as these will increase once the introductory period ends. If there are fees or other charges associated with the loans, take these into consideration as well. Contact the lenders that offered you specific quotes that you have questions about and ask them to clarify the quote.

5

Visit or contact the lender who offered you the best quote on a refinance loan for your truck, speaking to the same individual that gave you the quote if possible. Remind him of the quoted interest rate and loan terms, keeping in mind that your interest rate may vary slightly on the actual loan depending on the credit score they receive when they run your credit during the application process. Fill out and submit the refinance loan application, and then wait for the lender to contact you concerning the loan's approval.

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Can I Finance a Car with a Rebuilt Title?

One way to minimize the cost of purchasing a vehicle is to consider buying one with a rebuilt or salvage title. While these vehicles have sustained prior damage, this often means that you can purchase them for less than a similar model with no prior damage. However, if you need to finance the purchase, you're likely to have difficulty obtaining a loan.

Identification

A rebuilt title may be issued to a vehicle that has been declared a total loss by an insurance company after an accident and is then reconstructed. Each state has specific guidelines that vehicles must meet to receive a rebuilt title before being put back on the road, and many require that they be inspected first to ensure their safety. The vehicle owner must also find an insurance company that is willing to provide coverage for the vehicle.

Obtaining Financing

According to the Fox Business website, it can be extremely difficult to obtain financing for a vehicle with a rebuilt title. Financial institutions tend to shy away from rebuilt vehicles because it can be difficult to assess the true amount of structural damage the vehicle sustained. Understandably, banks are leery of loaning money for a vehicle with uncertain reliability and that may not last for the life of the loan. Another problem is that insurance companies are often reluctant to insure rebuilt vehicles.

Borrower Default

Banks also avoid financing rebuilt vehicles because of concerns over borrower default. Some potential borrowers may resort to purchasing a rebuilt vehicle because credit issues may prevent them from obtaining a loan for a standard vehicle. If the borrower defaults on a loan for a vehicle with a rebuilt title and the lender needs to repossess it, the vehicle's low value means the bank will receive little when it attempts to resell it.

Options

If you have a very good relationship with your current bank and have previously financed vehicles through it, you can see if it is willing to finance a rebuilt vehicle. Another option is to explore purchasing a vehicle through rebuilt vehicle dealers such as SalvageTitleAutos.com, which offers financing in some cases. You can also apply for a personal loan from a source such as a consumer finance company and use the money to purchase a rebuilt vehicle.

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What Do I Need to Know When Purchasing a Car?

Buying a car is one of the most important decisions the average person will make in his or her life lifetime. The type of car you buy can affect your safety as well as the number of people you can transport or the amount of cargo you can haul. It is important to have as much information as possible before purchasing a car to ensure that you make an informed decision.

What is the Vehicle's History?

If you are buying a used car, it is imperative that you are aware of the vehicle's history, such as any accidents it has been involved in and other events that may have damaged the car. Sellers of used cars may be reluctant to divulge history information if they think it will drive customers away. CARFAX is a vehicle history reporting service that is able to provide information on crash history of cars based on the Vehicle Identification Number (VIN).

What do I Need out of My Car?

It is important to know exactly what you plan to use a car for before buying it. The features of the car should fit your needs and preferences. For instance, if you simply plan to use the car for commuting to work, a small sedan with good gas mileage might be a good choice. On the other hand, if you need to transport children or carry large amounts of cargo, a van or truck might be a better fit.

How much Car I Afford?

Salesmen specialize at getting people to buy more than they want or need. It is important to determine your budget for a car ahead of time and stick to the budget so that you do not stretch yourself financially. Consider leasing a car if you like having the newest and best technology. When you lease, you pay a monthly fee to use a car instead of buying it outright. Leasing can be a costly option, but buying new cars every few years to upgrade to newer models can also be very expensive.

Warranties

New cars typically come with a manufacturer's warranty that covers various mechanical failures the car might suffer. It is important to be aware of all the warranties that apply to the car and how they compare with other vehicles. For instance, one car might have a five-year power train warranty while another might have a 10-year warranty. If you purchase the car with a shorter warranty and the engine fails, you might be stuck with a costly repair bill. Some car dealers also offer special deals, such as free oil changes and discounts, if you bring the car back for maintenance after you buy it.

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How Does Car Refinancing Work?

A car refinancing can lower your interest rate, reduce or increase your payment period and decrease your payments. When a car is refinanced, the original loan is paid off by your new lender, and the lender then establishes a loan agreement with you.

Definition

A car refinancing occurs when a borrower replaces the original loan with a new loan, whether from another lender or with the same bank. The new lender pays the entire original loan and gets the title to the vehicle being refinanced. A new car financing contract is drawn up between the borrower and new lender. The borrower makes payments on the car loan as usual, but he now makes them to the new lender instead of the original lender.

Process

A borrower does not need to wait for a certain time to look into car refinancing, unless his original loan contract has a prepayment penalty. Such a penalty charges a fee if the loan is paid off early, but this clause is more often seen in mortgages than in car loans. The borrower can talk to his original lender about refinancing options or gather quotes from other lenders. Once the borrower has found the quote that meets his needs, he applies for the loan. The application process varies from lender to lender, but it should not vary greatly from the original loan application process.

Advantages

Refinancing a car loan comes with many advantages. One major reason for refinancing your car loan is to reduce the interest rate. If you took out a car loan while your credit was bad, your interest rate may be much higher than the prime rate. Refinancing after your credit is cleaned up can save a great deal of money. You may also choose to lower your car payment by extending the amount of time for the loan contract. If you extend the contract, you will owe a higher amount due to accumulated interest, but the monthly car payment may be lower.

Disadvantages

If you are in a worse credit situation than when you initially got the car loan, you may not be able to find refinancing terms that are favorable to you. Your car may not be eligible for a refinancing due to the amount of equity in the vehicle --- namely, if you have negative equity. Negative equity, referred to as an upside down loan, occurs if an auto loan is higher than the car's actual value. The lender may also refuse to refinance if the car loan is not large enough.

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What Is the Law in Florida If Someone Sells You a Car With a Lien?

Florida law requires you to acquire a car's title when you buy a car. To acquire the title, the former owner signs the title over to you and you also sign. Any liens on the car are stated on the title. Paid liens should have a stamp that says "lien satisfied" over them. If you buy a car with a title that includes current liens, you must pay the liens off before you can fully own the car.

Liens

Liens are claims by creditors made on a piece of property. A creditor can sell the property to repay the debt if the debtor does not stick with an agreed upon payment plan. All liens are reported on the property's title, and in Florida, car liens fall under the "liens on personal property" category. Many people take voluntary liens when they sign up for car loans.

Mechanical Liens

Florida allows businesses that have worked on property to place a lien on the property if the property's owner cannot pay. If the previous owner could not pay a car repair bill, a lien may have been placed on the car. Furthermore, subcontractors can place liens on property if the contractor did not pay them.

Car Liens

Once a lien is placed on a car, it stays on the title until the debt is paid off -- even if the title transfers to a new owner. Because the lien is on the car, you are not responsible for paying off the debt; the creditor cannot go after you, take you to court or try to take any other property. The creditor can reclaim the car to pay for the lien, though, and you can only be clear of this threat by paying off the lien.

Warning

Always request the title, research the title, and have the previous owner sign over the title before giving the owner money for a car. Florida law assumes that you saw the title and received the title before giving the previous owner money, because you cannot legally own the car until the title is in your name. As such, the law offers no recourse for liens that came with the car, as valid liens are stated on the title.

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How to Refinance My Auto

You're the proud owner of a brand-new auto but the interest rate on the loan you got from your dealer is sky high. If you have a good job, better than average credit, have been making auto loan payments for at least three to six months, and have not moved in the last six months, you may qualify for an auto refinance. Even if you have bad credit, a discharged bankruptcy or other liens on your name, you can refinance your car and drive away with bigger savings.

Instructions

1

Gather information necessary for an auto refinance, such as your current auto loan contract and the account number, the exact name and spelling of the owner of the auto, the year, make, model and vehicle identification number (VIN), and any modifications that were made to the auto since you bought it.

2

Obtain a copy of your credit report from Experian or Equifax and look at it closely. Get old addresses removed, correct any errors and close old accounts before applying for auto refinancing. Your credit score, debt-to-loan ratio and your past payment history will be examined before a lender will qualify you and lock you into an interest rate.

3

Call your current auto loan company and get the loan payoff amount and the date it'll expire. Find out if there's a prepayment penalty and how the interest has been calculated. Read your current loan contract to find out if you can get an interest refund for paying off the loan early.

4

Request free refinance quotes from My Auto Loan or Bankrate.com and compare rates and fees from several companies. Alternatively, visit local credit unions and ask about their rates. Credit unions can offer interest rates at about 2 percent lower than commercial banks, and you can be approved over the phone in a matter of minutes.

5

Refinance your auto if you can get a simple interest loan at a rate at least 1% lower than your existing loan. Ask for a detailed itemization of loan and title fees before you sign on the dotted line. Punch numbers on an online calculator to get an idea of what your monthly payments will be. Auto refinance loans may provide lower monthly payments, but may cost you more in the long run because they may be stretched out longer than your original loan.

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How to Finance a Repossessed Vehicle

Once your lender repossesses your vehicle, you may have an opportunity to purchase it back before it is resold privately or at auction. Expect to pay for the loan's payoff amount in addition to late payments and repossession fees. You may face issues when applying to an auto loan provider for another loan, as potential lenders require that all loan accounts be current and not in default. Even though you're behind in payments, you still may obtain a loan approval.

Instructions

Obtain a Loan Approval

1

Call your current lender to obtain the vehicle's total purchase price. You should receive a letter that outlines the costs and options of reclaiming your car. Find out how long you have to pay for and retrieve your vehicle before it is resold.

2

Apply for a loan with any lender you'd like. You may have to seek out a co-signer or use a subprime lender, but try to obtain a loan from a traditional lender on your own first. Visit auto loan provider websites to view rates and options or apply at a bank or credit union in your area.

3

Give your potential lender your vehicle information; have your VIN (vehicle identification number), year, make, model and mileage ready. Fill out a credit application, providing your name, address, Social Security number, date of birth, employment information and income information.

4

Wait for your approval decision, which can take several days. If your loan request is denied, use a co-signer if possible. Find a co-signer who has good to excellent credit and an annual income of over $22,000.

5

Apply to the same lender or a different one with your co-signer. Using a co-signer allows you to take advantage of lower rates, longer terms and lower down payment requirements. Your co-signer can go with you to a lender to provide an application or call on his own to offer information and verify identity.

6

Apply for a loan from a subprime lender if you can't find a co-signer. Locate a subprime lender online or locally. Call a a potential lender if necessary to ask questions before applying, as interest rates can prove as high as 29 percent in some states through a subprime lender.

Paperwork

7

Go over loan approval terms with your lender, whether using a local bank or credit union, online lender, co-signer or subprime lender. Ensure your payment terms are affordable and you can supply a down payment if one is requested.

8

Give your lender any information it requests. You may have obtained an approval, but many lenders require proof of income (your most recent pay stub), proof of address (a recent utility bill) and proof of employment to verify your employment history before your processing your loan check. Fax or email the information if the lender is not in your area.

9

Make changes to your car insurance policy and provide the lender with proof of insurance promptly.Your lender must be listed as the policy's lien holder. Full coverage insurance is a requirement of most lenders, so ask your lender for the amount of coverage you need.

10

Sign your loan contract. If the lender is not local, ensure the paperwork is sent to you by the next day or that the paperwork will be processed within the time frame you have to purchase your vehicle before it is resold. Keep your copies of the loan contract and obtain your check, which should be made out to your original lien holder.

11

Pay your old lien holder provider promptly. Talk with your previous lender to find out where you can offer your check; you may be required to pay the place that is holding your car. Make your payment and retrieve your vehicle.

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Auto Equity Loans Vs. Title Loans

When you need cash fast and you own a car outright (no liens on the car), you have different options available to use your car as collateral to secure a short-term cash loan. For many people, especially car owners with bad or poor credit, this represents a good way to fulfill some immediate financial obligations.

Auto Equity Loans

Auto equity loans are very popular in the United States. In fact, most check cashing businesses offer auto equity loans to car owners who are willing to collateralize their vehicle. Loans of this kind have to be paid back in a certain period of time and you are charged interest on the loan amount that's outstanding. If you don't pay the loan back in the specified period---by the end of the "term"---then the lender has the right to take your car. These types of loans are typically handled in face-to-face transactions.

Quick Cash Auto Loans

There are also quick cash auto loans for vehicle owners. This type of car loan allows you to borrow up to $2,500. Quick cash auto loans can be applied for online, and while there isn't a credit check, you do have to own your car outright and have auto insurance coverage on the car you're using as collateral for the loan. Typically, quick cash auto loans have a term of 30 days, but can be extended for an additional fee.

Title Loans

Title loans require you to sign over the car you own outright to secure the loan. Car title loans usually have a 30-day term and must be paid in full at this time or you can lose your car. While a title loan does not require a credit check, it does require income verification---usually by showing at least two recent pay stubs.

Advantages

Generally speaking, using your car as security is a quick and easy way to obtain cash fast. Equally enticing is the fact that credit checks are not performed, so those with less than stellar credit reports can enjoy peace of mind that a low credit score won't disqualify them.

Disadvantages

There are several disadvantages to these types of loans. First, the interest rate you pay is typically a lot higher than other types of loans and even more than some consumer credit cards. Some charge as much as 25 percent or higher. The second disadvantage is that if you don't pay the loan back in time, you can have your car repossessed. With that comes a third disadvantage: there is little state regulation of car title lenders. So if you run into problems, you may have a difficult time getting a fair, speedy resolution.

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Disadvantages in Buying a Salvage Vehicle

A car or truck is a salvage vehicle if the insurance company deemed it a total loss, often due to the estimation that the cost to repair the vehicle is more than its value. The vehicle likely has been in a major accident, has been through a flood, or has other significant problems with its frame, body or parts. Although salvage vehicles are much less expensive than comparable used cars with clean titles, they have a number of disadvantages as well.

Cost to Repair

If you are buying a salvage vehicle that has not had any repairs done to it yet, you will be responsible for bringing it back into working condition. If the damage was greater than you anticipated, you might end up spending more on repairs than you saved by purchasing a salvage vehicle. Even after the initial repairs, you could find more problems as the car continues to break down or not work properly.

State Regulations

Many states require that salvage vehicles pass safety inspections before they can be registered in the state. After the vehicle passes inspection, the stamp on its title may be changed from "salvage" to "rebuilt," which adds some resale value to the car. Some states do not revise titles to reflect the "rebuilt" status until the car has been successfully on the road for a specific period of time.

Difficult to Insure

Insurance companies are often wary of insuring salvage vehicles because they are not in normal condition and may lack safety features. If you find a company that will insure the car, you will likely not be able to purchase comprehensive and collision coverage, which would pay for repairs to your car if you got in an accident. Driving a salvage car without liability insurance is illegal, and driving without full coverage can be risky because you would have to pay for all the repairs to the vehicle if it were damaged.

Lower Resale Value

A salvage vehicle will never have a clean title, as it will always be marked either as "salvage" or "rebuilt," depending on the car's status and the regulations in your state. This means that when you go to resell the vehicle, potential buyers will know that the car has had significant repairs and will not pay the same amount for it as they would for a car with a clean title. Buyers may also be wary of purchasing the car because of all the same reasons that you were, including difficulty insuring it, lack of confidence in its reliability and its decreased value if it were ever sold in the future.

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How Does a Car Lease Affect Your Credit?

Those who purchase cars with an auto loan can affect their credit history significantly with the actions they take surrounding their loan. Individuals who lease cars can also affect their credit histories. The way you make your lease payments can help or hurt your credit score and your chances of getting future credit.

Same as Buying

When you lease a car, you may not think that it is affecting your credit as much because you are not actually borrowing the money to buy one through an auto loan. In reality, getting a lease is basically the same as buying a car when it comes to your credit report. You are opening a new account and you are on the hook for the total amount of your lease. Lenders will count this as a debt when evaluating you for credit.

On Time Payments

When you have a car lease, you also have the ability to significantly improve your credit score. Most leases last for three years or more. If you can make your payment on time every month, this will boost your credit score over that time. Your payment history is one of the most important factors when calculating your credit score. If you can always make your payment on time, this will help your score and make you a more attractive borrower in the future.

Early Termination

After taking out an auto lease, sometimes you have to terminate the lease early. When this happens, it can have serious negative repercussions for your credit. This is basically the same as defaulting on a loan. The account will show up on your credit report after you have already turned the car in to the dealer. This can seriously hurt your chances of getting credit in the future. Car dealers will also be skeptical of working with you again unless you pay a high interest rate.

Making a Deal

If you need to get out of your lease, there are ways to approach it that will not hurt your credit. In this case, you should talk to the dealer about making a deal. You could pay a buy-out fee to the dealer and then the dealer will let you out of your lease. This will not be reported to the credit bureaus as if you defaulted on an auto loan and the dealer had to repossess your car.

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How to Secure Payment When Selling a Car

Selling a used car can be a headache, but the challenge only grows when a buyer needs to finance the purchase rather than paying cash outright. In the event you decide to take the risk of allowing your car's buyer to make payments, you will need to take steps to make your transaction as transparent and secure as possible. Taking the right actions to protect yourself at the outset will reduce your risk in the event of later nonpayment by the buyer.

Instructions

1

Execute a written sale agreement with the buyer. In this agreement, detail exactly what you are selling to the buyer for what price. Include the Vehicle Identification Number (VIN) in the sale agreement to identify the vehicle being sold. State what additional accessories and equipment, if any, you are transferring to the buyer along with the car. Specify that the purchase is "as is," with no warranties.

2

Execute a promissory note with the buyer. The note provides evidence of the buyer's obligation to repay you the financed amount, specifying the interest rate and maturity date of the loan. Many sources offer form promissory notes that you can use when selling your car, but read the entire document to make sure it actually applies to your situation.

3

Execute a security agreement, or "financing statement," with the buyer. This document constitutes the buyer's pledging of the car as collateral for your loan. Require the buyer to maintain collision insurance on the vehicle for the life of the loan. Be sure to include a right of repossession in the event of nonpayment; without this, you have no right to repossess the car. Under the Uniform Commercial Code, your security interest is not perfected until you file it with the appropriate authority in your state. This will generally be the office of the Secretary of State or a similar official.

4

Take the appropriate steps to place a lien on the vehicle title in your state. Generally, this involves submitting the bill of sale and an application form to the Division of Motor Vehicles. The new title in the new owner's name will show you as having a lien on the vehicle.

5

Retain possession of the new title in a safe place along with all other evidence of your transaction. When the buyer has paid off the loan, release the lien on the title in the space indicated and forward it to the buyer. In the event the buyer defaults on the loan agreement, consult an attorney licensed to practice in your state before repossessing the car to ensure that you comply with all state-specific legal requirements.

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How to Refinance a Used Vehicle That Is Upside Down

Refinancing your auto loan even if you owe more than it is worth, also known as being "upside down," is a possibility. Banks determine a vehicle's loan amount based on its value and your credit. If you have good to excellent credit, you may borrow up to 120 percent of your vehicle's value, which can help with negative equity. Otherwise, you may have to put money down.

Instructions

1

Call your bank to obtain your car loan's payoff amount; you need it to apply for your refinance. Locate your title or an insurance card to view your vehicle's year, make, model, level and vehicle identification number. Have this information ready to supply with your loan application.

2

Inspect your vehicle and write down any extra options it has. Your vehicle's loan value is also based on its options, which increase value. Note options such as a sunroof, leather interior, alloy wheels, navigation system or add-ons like side-steps, a roof-rack, brush-guard or tow hitch.

3

Go over your funds to determine how much money you can afford to put toward the loan. If the bank requires money down, you will already have an idea of how much money you can devote. Go to bank websites or call in to determine rate offers for used cars to determine the one that best suits your refinancing goal.

4

Apply to the new lender for your refinance. You can do this over the phone, in person or through the bank's website if it allows. Provide your personal and vehicle information, including its payoff amount as your intended loan amount.

5

Wait for notification of your approval or decline. The bank should contact you within one week to discuss your application. Discuss your term and approval rate with the bank representative.

6

Make an appointment with the bank representative and make a note of any items required for the loan, which usually includes the vehicle's title and proof of insurance. Contact your insurance agent to add the bank as the vehicle's new lien holder and obtain proof of coverage.

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Does Refinancing a Car Hurt Your Credit?

You can save thousands of dollars during the life of your car loan by filling out a 10-minute application to refinance your car loan. Refinancing a car loan takes your old loan and gives you a new one with better rates and terms. This strategy could hurt you slightly in the short-term, but the long-term benefits of refinancing usually outweigh the negatives.

Identification

Because refinancing your car loan shows up on your credit report as a new loan and requires a credit check, it could "ding" your score a few points, according to BankRate. As long as you have a good credit score -- above 720 -- this has almost no effect on your ability to get credit or the best interest rates.

Considerations

A credit check for auto-loan refinancing could hurt your score a lot more if you apply for several other types of refinancing at the same time. The shorter your account history and the more accounts you have, the more credit checks will affect your score. Also, if your refinancing stretches out the life of the loan, this extends the life of your debt obligation, making you look riskier to lenders.

Time Frame

The FICO (Fair Issac Corporation) credit scoring methods takes into account the average length of the accounts on your credit report. Refinancing an auto loan pays off your old loan, opens a new account and shortens your credit history. On the other hand, reducing monthly payments lowers your debt-to-income ratio -- a preference of lenders.

Tip

If you plan to refinance your car, put in all applications at the same time. The FICO score counts all inquiries as a single inquiry if you "rate shop." If, for example, you apply for a car loan with five different lenders, your score would only reflect one inquiry instead of five. All applications must occur within 14 days of the first application. You can avoid refinancing in some situations by asking the lender to reduce the interest rate on your loan.

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