Auto Refinance-What you Should Know
Most auto loans come with terms that are relatively short, varying from three years to five years depending on the price of the vehicle and the buyer’s credit history. Even though this is a relatively short period of time, there is an opportunity for an auto refinance; however. If you are able to decrease the monthly payment or repay the auto loan according to different, more favorable terms, an auto refinance can quite advantageous. It is important to evaluate options carefully in order to determine whether an auto refinance is suitable for you.
How to Obtain an Auto Refinance
In many ways a conventional auto refinance is much like a home mortgage refinance. The existing auto loan will be paid in full when the new auto loan is procured. Under the terms of the auto refinance the funds from the new loan will then be disbursed to the original lender. The title of the vehicle will also be transferred from the original lender to the new lender when the original loan is fully repaid. The buyer will not receive the title to the vehicle until he or she has repaid the new loan.
Using an Adjustable Rate Mortgage for an Auto Refinance
If you own a home you may also have the opportunity to obtain an auto refinance by refinancing your home and then consolidating the auto loan under an ARM or adjustable rate mortgage. Of course, this is not the most conventional way to obtain an auto refinance but it can certainly be done. This option provides you with the opportunity to consolidate your auto loan under an adjustable rate mortgage, which can provide debt consolidation as well as reducing monthly payments as long as the terms of the mortgage are more favorable than the terms of the original auto loan.