Auto Refinance Loans
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UPDATED: Jan 14, 2012
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Refinancing is a common strategy in many financial agreements, and is frequently used by auto loan borrowers to secure better interest rates and terms. The process of automobile refinancing consists of a borrower paying off an original auto loan with funds from a second loan arranged with a different lender. Automobile refinancing can be an attractive option when market conditions result in lower interest rates for car and truck loans, and may also be useful for buyers whose credit ratings have improved since the original car loan agreement.
[loansform]While auto refinancing loans are widely available, a variety of restrictions and special considerations apply. Borrowers with less than seven thousand owed on their vehicle financing are at a disadvantage when seeking a refinance loan, as many lenders are not willing to work with small, potentially short-term loans. As some auto loans direct larger amounts of interest to be paid during the early stages of repayment, refinancing within a short period, typically within the first year, is a common practice.
Nearly any original auto loan may be improved through refinancing, but vehicle buyers unable to secure interest rates below three percent are especially likely to locate more attractive deals at some point during the course of repayment. Borrowers may be obligated to deliver early repayment fees when refinancing, though auto loan refinancing agreements do not involve property appraisal, unlike the refinancing process in other markets.
As over seventy percent of vehicle buyers use the Internet while researching their purchases, the popularity of online auto loan refinancing services is growing—though traditional lenders, such as local credit unions and banks, are also frequently used for obtaining better deals.