How Does Auto Refinancing Work

You want to save money on your car loan and you have been considering refinancing… but you aren’t sure what that entails. Below, you will get a better understanding of how it works, so you can then determine whether it’s the right move.

Simply put, when you refinance your vehicle, you will replace your current auto loan with a new one from a different lender. The new loan you receive will pay off the original loan. Then, you start making your payments each month to the new lender. It’s as easy as that, and it generally doesn’t take long to fill out a refinance application to see if you can qualify.

Should You Refinance?

In some cases, it might be better to hold off on refinancing. If you are behind on your payments, have a large prepayment penalty, or owe more than your car is worth, it could be difficult to refinance. However, if those things don’t apply to you, it could be a good idea.

First, though, you should check your credit. Lenders will look at the credit report and your score when you try to refinance. If you have a higher credit score now than when you got your original loan, it will generally result in lower interest rates. This means it is a great time to refinance.

Get Your Documentation Together

Generally, you need to have the same sorts of items and information you had when you got your initial loan from your current lender. This includes proof of insurance, driver’s license, proof of income, vehicle information, and your Social Security Number. Additionally, you should have a copy of your original loan contract. If you don’t have it available, contact your current lender and request an emailed copy.

Find a Refinancing Company

Refinancing is a solid choice for many people who want to save money on interest and perhaps even lower their monthly payments. Of course, you need to be sure the refinancing company you use can help you get what you need. Take the time to find a reputable auto refinancing company that can explain your options and get started.

Before you sign anything, be sure to look it over and see how it benefits you. Know how much you have to pay each month, whether the length of the loan has changed, etc. Only sign once you are happy. Contact FinleyFi Solutions to learn more!

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