Refinance Car Loan Guide

The recession is on, and many people are trying to free up cash any way they can. If you do it wisely you may just end up in a better situation then you started. For home owners many of you have negative equity. If you own the majority of all of your car you can refinance it or take out a title loan on your vehicle at a lower rate then you are currently paying on other debts most likely.

Below is a story from a friend of mine that tells what she did to take advantage of current interest rates:

I recently went to go refinance a car. The loan amount came to about $15,000 between the two vehicles I owned and the interest rate was 4.6% or so. I never saw the $15,000. I had the bank write a cashiers check directly to my 2nd mortgage. Now I have two car payments but the peace of mind that if something happens I can at least sell my home.

Most banks or lenders will want to see the vehicle if you want to refinance a car loan. They want to make sure you still have it, check out the condition it is in to figure out what price to give you. I recommend at least washing it, and cleaning it out. It may just add up when they check the value of the car in good condition vs poor condition.

The bank will also want to see your proof of insurance. That way if you get in an accident their loan is protected. I usually get gap insurance to cover any amount that the insurance doesn’t cover that I may still owe on the vehicle. Protecting my loan and keeping me from being in a situation with no car but the remaining debt to still pay off.

Most people don’t automatically think to themselves, “I could refinance my car loan”. Is the interest rate better then the debt you will be paying off? If your only doing it to add to the budget it will soon run out and you will be in the same problem you were in before. Leveraging the percentage rate is the only reason I would do it. If I owed $15,000 on my second I would eliminate the second mortgage payment that was originally based on a much higher amount, and would most likely lower the interest and the payment.

Logically, when you refinance your car loan, you may pay off your debt 1 year sooner, or move to that great new job 1 year sooner, or simply free up 30 bucks a month to cover your new cut in pay. When a recession hits don’t just sit there and complain. Think smart evaluate your assets and make them work to your advantage. The sooner you get back ahead of the game the sooner you can take advantage or great investment opportunities while everyone else is still jut sitting waiting for things to get better.

Take control and see if perhaps getting a refinance car loan is s good idea for your finances.