Three Ways to Refinance Your Car Loan

by : Melissa Kellett

Traditional car loan options since the idea is to improve the loan terms and either save money or reduce your monthly payments. In order to do so, these refinance alternatives can provide you with the proper solution.

Whether you need to reduce your car loan monthly installments or you want to save money by exchanging expensive debt with new cheaper debt, you need to ponder the different financial products available for refinancing as not all of them will aid you in obtaining the results you are searching for.

Traditional Car Loan Refinancing

Traditional car loan refinancing can be obtained by requesting a new secured loan in order to repay the existing one. The loan can also be unsecured, thus you can get either a car loan or an unsecured personal loan in order to repay a previous secured or unsecured loan.

If you obtained your loan through a dealership or if your credit situation was not that good, chances are that you will benefit from refinancing. However, you should always analyze the rate, repayment program and other loan terms from the new and previous loan before rushing in to sign a new loan contract.

Homeowner Loans

Cash-out refinance mortgage loans and home equity loans may be the best solution if you are a homeowner. These loans carry the lowest interest rates on the loan market and also provide the longest repayment programs. Thus if you want to save money and / or reduce your monthly payments, homeowner loans are the best option.

After requesting and getting approved for a refinance loan or a home equity loan you will have to use the money to repay the outstanding car loan. Due to the nature of these loans, they are also a lot easier to qualify for. So, if you are a homeowner, you will not have to worry that much about your credit score or history.

Debt Negotiation

It may sound strange to talk about debt negotiation within a refinance process. But truth is that debt consolidation is not the only situation when you can negotiate with your creditors new loan terms. Most lenders, in order to make sure you will repay the loan are open to the possibility of agreeing new loan conditions to reduce the risk of default.

Moreover, some lenders offer this possibility explicitly as they can raise the interest rate while extending the repayment program. This way, you get lower and affordable monthly payments and they get more funds in return for the money they have lent. No lender agrees to negotiation out of the goodness of their hearts, they either seek more profit or to reduce the risk involved in the financial transaction.

However, if you obtained your car loan through a dealership it may be harder to negotiate new loan terms as they are limited by contracts with the car industry. Thus, in this case, you may need to resort to alternative sources of finance like the ones mentioned before.