Most people that have been in debt get professional advice on refinancing their car. It is a common thought that refinancing decreases monthly loan payments with low-interest rates. But to what extent is this theory right? Let’s check it out via today’s blog: “ Can You Refinance A Car Loan With The Same Bank?”
To add more information, we will like to mention here the definition of car refinance, its conditions, procedure, and how it affects the loan receiver. Go through and scan the article til the end to have the information you were looking up. To have more such blogs related to different loan types keep visiting our site.
You can now see the easy explanation under each heading to absorb knowledge regarding car refinancing.
What does Car Refinancing mean?
Consider a person who drives a car that he bought with a car loan from a bank say ABC Bank. After months and years, the car loan is still pending and he can’t manage to pay that car loan with the small income he has. Even the car’s price is so low than the total loan. So at this point, he would think of refinancing his car.
Refinancing means replacing one existing car loan with a newer one to change the vehicle and to meet other benefits. Refinancing allows the car holder to return the old car and buy a new one by getting a new loan from the lender. Though the lender would charge him a new loan the previous loan now has refreshed itself.
The new car owner now has to return the new payments of the car loan with a relatively smaller installment each month. This may also serve to reduce the interest percentage each month depending upon the policy that the buyer used.
Why do banks offer a car Refinancing loan?
The bank, that lent you money in the first car loan offers you refinancing your car because of a few reasons:
- The bank will never like to miss your loan, so if you paid a part of the previous loan and want to refresh it, this will be making money for the bank.
- Maybe the new refinancing car gives the banks an opportunity to offer a new loan with a greater interest ratio.
So, this is the reason why refinancing a car appears no odder to the lenders and the cope to give you in the minimum time slot.
Can you refinance a car loan with the same bank?
Yes, of course, you can choose a refinancing deal with the same bank or lender you did previously. However, the process of changing the bank is a little hectic.
How to Refinance a Car in five simple steps?
Refinancing a car occurs in five steps only; let us explain each of them to you.
1. To take the right decision
The first step is to judge whether you fall on the merit of refinancing the car or not. So there are four conditions that may qualify you sensibly to undergo the procedure and take the decision finally.
- The car you owe is very old and is not very usable now.
- The car you have is less worthy than the actual loan you took to buy it.
- You have a prepayment penalty. This is the fee that helps you finish your loan installments earlier.
- You cannot pay the installments of your current loan.
2. Checking credit
Next is to check the credit you have. If there is a high credit in your credit report you can have less interest ratio and vice versa. So you must look at your credit before you lend a car loan.
3. Getting the documents ready
So once you qualify for a car refinance, you need to go check your documents. Have the following set of papers to apply for a refinance loan:
- Your or your driver’s Car License.
- And the assurance that both will have an insurance company.
- Your contact which the owner will have.
- The copy of the previous loan and
- The proofs of your paid installments as receipts
- Moreover, the banks ask for more details like the affidavit of the person and the vehicle information plus all the income-related details.
4. Asking detailed questions at the lender’s office | Can You Refinance A Car Loan With The Same Bank?
Before you go seek the opportunity, you should think of all the possible questions you may ask your lender to kill all the confusion. You may ask for new time slots, new interest ratios, the APR (average percentage rate ) of the interests every year, and the number of installments. Make sure to sign the refinance papers with a crystal clear mind and this is possible if you ask a lot.
5. Choose to prequalify instead of qualifying:
Sometimes this may happen that you applied as a Qualified candidate for refinancing and as a result, a strict inquiry begins on your account. If you are not 1000% sure as a qualified applicant then you should better stand at the prequalified option to avoid all the unpleasant scenes like that one.
6. What are the benefits of car Refinance?
Whoever the person you are, three is very less chance of getting the benefits of car refinancing. This can only serve to save you from an unnecessary interest payment when the interest rate drops and you are still paying at a previously high rate. Or it may simply help to raise the living standard of a person from a poor car to a newer and bigger car.
So this was the alpha and omega of car refinancing and the procedure. Get through all the questions to know even the minor details. Share the article with a person or friend who is planning to refinance a car loan. Maybe this could help him make the right decision at the right time. Get the link and copy it to your clipboard so that you may visit our site whenever you long.
Does Refinancing a car give cash to the car owner?
No, it does not. But it may help him save some cash if he qualifies for a car refinance.
Can I refinance a car with a new lender?
Yes, you can, this would require copies of authentic documents from the old lender or bank.