Liviu Marcus
If you are keen on getting an auto loan refinance, you have probably already calculated how much it is going to cost. However, what if this number is higher than expected? If it is too expensive to refinance your car loan due to the higher level of interest rate, here are five things to consider.
Trade in the Car
After having your vehicle for a while, you may find that trading it in for a new loan with a lower interest rate can be a huge value. This will aid in minimizing the monthly payments of the auto loan that would be required to be paid for every month.
If feasible, think about this alternate choice rather than refinancing with a different lender, as there are no costs involved when you trade in an old vehicle to purchase a new one. That, however, is merely the cost of losing equity in your current car, which shouldn’t be too high.
Modify Your Loan
Those not willing to refinance their current auto loan have another choice – to modify it. The lender can as well cooperate with you in reducing the interest rate, prolonging the term of the loan, or lowering its monthly payment.
In case your options in the list are not suitable to you for any reason (or your determination prohibits you from changing anything), look at credit terms that other car dealerships offer, as they might be more favorable than your current ones.
Surrender The Car
If the value of your car is lower than your debt, think about giving it up. This refers to selling the car for money and settling what you owe on your loan. You will receive a check from the lender for the difference between what they sold it for and having them take your vehicle.
If you want to do this, make sure to check with them first, and keep in mind that not all lenders allow surrenders. Though some may grant exceptions in cases of extenuating circumstances, they usually require at least one payment on time.
A Co-Signer Should be a Part of the Application for Refinancing
The co-signer is a person who promises to repay the loan in case you do not. The banker will analyze the credit score and income reports of the family members who would put their signatures, too. The co-signer will be also in the picture.
For instance, it will be better for both people to make the borrowing process easier even though one of them has soft credit or completely has no credit history, while another has a well-built credit background. In essence, the candidate of my choice should be as convenient as possible for me, not only due to their experience within the industry but also related to the issues mentioned below when asking for their support through fund transfers and having a discussion of their previous job experience.
Sell the Car Privately
Prior to selling your car privately, you have to get a buyer. This can be done via Craigslist or Facebook groups. After you have gotten a person interested in buying your car, take it to the mechanic to undergo an inspection, which will include the transfer of its title, before coming to meet the person in person.
And prepare yourself for some bargaining. The buyer may negotiate a lower price than the one posted on Craigslist since he is aware of how few options there are for people in need of quick cash but who cannot refinance their loans.
To clear your car loan, refinancing may be a viable option. But if you can’t afford the larger payments, just don’t. Alternatively, look into other solutions that can involve selling your car or obtaining a personal loan from other lenders that often offer better rates than banks.
