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.
2Inspect 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.
3Go 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.
4Apply 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.
5Wait 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.
6Make 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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