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Refinance your car or auto loan - find help with car payments.

As interest rates drop to historic lows, many people are focused on refinancing to help them save money on their monthly bills. What many do not know is that refinancing their auto loan is easier to complete, it can be done in under 10 minutes, and it can save you some significant money (potentially thousands of dollars) on your car payments. Find more information on how to get help with car loan payments below, including refinancing, financial aid from non-profits and other options..

Process of refinancing a car loan

If you know how home refinancing works, then you pretty much understand how auto loan refinancing works as they are very similar. While the process is similar, one big difference is that refinancing an automobile loan is far cheaper, quicker and easier than refinancing a home mortgage. There's no need for an appraisal and borrowers can usually find out if they've been approved within an hour of applying online.

Lenders work with banks to get you a new car loan. Almost all of the major financing companies offer this service to qualified borrowers, including Ally, Wells Fargo, Chase, and others. It is generally in their best interest to work with the individual or modifying the note on their car loan rather than see the borrower default.

This new financing is then used to pay off your existing automobile loan, so you will still have one payment to make each month. Refinancing your car loan can save you money by lowering your interest rate. This will have in effect the same impact as lowering your monthly auto bills and overall total car payments that you need to make. The bottom line is that there are often lenders, credit unions and banks who will offer you a lower interest rate on your car note in order to get your business. It is always worth your time to at least check for a lower rate, as it is free to do.

Sometimes a customer may not qualify for a lower interest rate, but they can still reduce their monthly payments. They should ask their lender for other options. One common solution that can help a family is they may be provided with a longer loan term that provides customers additional repayment time. For example, if the new loan adds additional months to the time you have to repay it, then this extra time should in effect reduce the monthly auto loan payment that you are responsible to make.




Potential savings from a new auto loan

Say you bought your new car six months ago. Maybe at the time you did not have the highest credit scores, or had difficulty with obtaining financing in today’s environment when you bought that car. The automobile dealer told you that your interest rate would be 8 percent on a five-year loan for a $23,000 car. So using this example your monthly payments are currently $465 per month.

Now lets say you contact a company that provides auto refinancing, either by reducing the interest rate or maybe extending the repayment terms. You may be able to refinance the balance of your car loan to a lower interest rate, and thereby lower your monthly car payments to around $400 a month. That is equal to a savings of almost $5,000 over a 60 month period of time. Or if the term is longer, the savings may be even greater.

National lender Wells Fargo states that customers who have refinanced or cashed out their auto loan with them received an average of $4,987 in cash savings. This is one of the nation’s largest financing companies and they partner with Ford, GM, and other manufacturers. Read more on Wells Fargo auto loan refinance and cash outs.

Auto loans refinanced by Capital One have led to borrowers saving on average $500 per year on their monthly car payments. Learn more about assistance with car payments from Capital One.





Bank of America also offers an auto loan refinancing product, and they are one of the major lenders that operates in this marketplace. Both extensions and reduced interest rates may be offered in the car note. Continue with Bank of America auto loan refinancing.

JP Morgan Chase also provides this service. Interested consumers can apply for free, either over the phone or at a local banking center. Customer service representatives can guide individuals through the Chase auto loan refinancing process.

All it takes is about 10 minutes to fill out the refinancing application, and it can be done at no cost. By refinancing your car loan at a competitive rate your monthly monthly payments can be slashed, and potentially save individuals thousands of dollars over time.

When an automobile loan is upside down, some of the programs runs by these banks and lenders may be able to assist. However they tend to be targeted at helping more traditional borrowers save money by lowering their interest payments or extending payment terms. For those individuals that do have negative equity, there are resources targeted at them, and they can get help with upside car loans.

Fees to refinance an automobile loan

Any time a consumer takes out a loan, or refinances a product, or in general deals with any financial matter you always want to be aware of fees and charges. Read the terms and conditions of any contract very closely.

In almost all auto loan refinance transactions, there will be charges to both transfer the title of the car loan as well as to re-register your car. These fees vary depending on the state you live in and the bank or lender you refinance with, but the total cost of these various fees in general shouldn't exceed $50 in most states.

Be sure to monitor this closely, and question it if need be. Many banks or lenders will also charge a processing fee to refinance, in which the amount of the charge will vary widely. Always be aware of these fees and shop around to find the most competitive offer. While there are generally fees involved, it usually is still beneficial to refinance a higher interest rate car loan as the savings will accrue over time.

Who should consider this service

Refinancing your auto loan should be of particular interest to those people who obtained their car loan directly from a dealership. The reason being is that because dealers always serve the role of a middleman in the financing transaction, a dealer will almost always increase the interest rates they get from the lenders they partner with. They will then therefore pass along that higher rate to the buyer in order to make money from the buyer.





Another reason to refinance a loan is most automobile dealers are leaning more heavily on extra services and products. The fact is many companies do not make much money on selling the car, but they are profitable due to these extra services. One big revenue source for an automobile dealer is by offering auto loans to their customer, and they use these for profits as shoppers get savvier about researching car prices online and it becomes harder for them to make money on the sale of the car itself.

Also note that that refinancing your car loan may be particularly beneficial to borrowers whose credit scores have improved since they first bought their car or truck. Maybe when they first obtained their loan they did not qualify for the lowest rates at that time, but now the situation may have changed. This is more common than not, and it is usually because borrowers have been making timely payments.

Lastly, as the economy improves and more lenders and banks enter the auto loan origination and refinance businesses, there are more competitors and lenders to choose from. With more competition in the industry, the interest rates you find can be cheaper.

Consumers who used a very long term loan when they bought their car, such as over 6 years in length, in order to lower their payments should also explore refinancing. What may happen is that now their financial situation or credit scores may have approved, and the bank may provide them either a shorter term (while at the same time lowering their payments) or they can get other assistance from the lender. This approach can also help them build more equity in less time.

There will be instances in which the car payment will never be affordable, even if a refinance of the auto loan is completed. Maybe the household’s income has declined so much or their credit scores are so poor that a bank would never approve it. Or maybe the owner just doesn’t want that truck or car anymore, so refinancing just would not make sense. In these cases the borrower will still need some form of transportation for work or other reasons, and there are charities and non-profits that will help to provide a free car.

If refinancing my car loan is such a great deal, why don't more people do it?

Good question. The general consensus as to why it is not more widely used is that most people do not know that they can refinance their car loan. Another of the big reasons is that even those people who do know about this expect the same kind of application-intensive process or additional costs that they need to refinance a home loan. However, those two barriers are not true.

It is normally a 5-10 minute, quick process to apply, and that is your only risk. Most banks and companies will provide a response to your application within an hour or so, if not even sooner. As mentioned above, it is so quick and simple to apply, you should always try. Also, the fees to refinance a high priced car loan (such as the transfer cost indicated) are often very low and the monthly savings more than offset that.





Additional ways to get help on automobile loan payments

While saving money on automobile loans can help people catch up, consumers have other options available to them. Every single option should always be explored, as even saving several dollars per month can add up over time.

Find out how to save hundreds of dollars on your car insurance bills. There are things to do that may be as simple as shopping around for a new policy. But in addition to that, car owners take other steps for saving money.

Many people do not know what to look for in an auto policy when shopping around, so they may overpay for insurance. This can impact their ability to repay or refinance their car loan. Get information on automobile policies.

Another option is to eliminate the monthly car payment entirely. This is generally used as a last resort, when the consumer just can’t afford to pay for their automobile anymore. So it can be thought of as an extreme form of refinancing. Find ways to get out of a car loan.

Some borrowers may be using high risk car title loans. Those individuals will tend to need assistance in paying them off or in refinancing. There are counselors who can provide advice on how to do this and there are also alternative forms of financing available. Get information on companies that offer assistance with title loans.

Credit cards can be used in some cases to either make a payment, refinance an existing auto loan, or to even buy a new car. This approach can help some families, but it does comes with risks as well as pros. Find more details on using credit cards for car payments.

Traffic ticket assistance programs are also available. There are some charities and government programs that can assist with unpaid parking tickets, court fines, speeding tickets, and related costs. Attorneys can even provide free advice for various automobile violations (along with loans). Find how to get help with traffic tickets.

Impound fees can sometimes be paid. Low income families that need their car for work and that lost their automobile due to registration issues, tickets, or a civil legal matter may be able to get help. Non-profits may offer loans to pay the retrieval fees or they can offer other assistance for related payments that may be due. Find help paying for impound expenses.







Refinancing your auto loan, lowering your overall interest rates and your monthly car payment will allow you save money over time. There is no risk to try this, and you can apply the savings towards those other bills that are due on a monthly basis.


By Jon McNamara

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