Re-financing helps you save money.
Market conditions would have changed after you financed your car. Perhaps, you might find a better deal due to the market rate variations. For instance when you bought your car, you took the loan from company A, at 11% APR. After 6 months you find that some other organization B, is offering re-financing at 8% APR. You can take the advantage of such opportunity, and save 3% per annum, which is a significant amount.
Most of the banks, credit unions, and other financial organizations provide auto re-financing. Their plan and rates vary from organization to organization.
How it works?
Upon approval of your refinance, you have to provide the information of your existing finance company, and the car details. They verify all the information from your present auto financier, and issue a check of the total balanced amount, on the name of that financier. It is known as paying-off.
When you receive this check, endorse it by signing at the back of the check. Send it to your present financier along with a letter, requesting to close your account. When they close your account, you should get the original “title” of your car and a letter stating that you paid off the loan.
You might have to send this original title to the new financier, henceforth you become liable to pay your loan with the terms and conditions to them.
Entire process can be step wise reviewed as:
- Step 1: Find out the best rates, plans and suitable company. Understand the terms and conditions suitable for your need.
- Step 2: Apply for re-financing, either online or by filling up appropriate form.
- Step 3: After receiving the pay-off check, send it to the current financier by endorsing (signing) at the backside.
- Step 4: When you receive the original title back from the current financier, send it to the new financier.
- Step 5: Your refinancing is done. Now new company is your current financier.
- Talk to at least 2-3 different financing companies. Always compare rates among various agencies.
- Understand all the rules, terms and conditions.
- If you have a direct deposit for your salary etc. to your credit union account, you might get better interest rates. Inquire about these options.
- Keep a copy of every correspondence.
- Don’t forget to do the bargaining.