In today’s tight economy people are holding onto their cars longer. If you have a car loan on an older vehicle, you might be wondering if lenders will refinance cars like yours. Let’s find out.
Are You Upside Down?
Every car has a market value. If the amount you owe on your current auto loan is greater than the market value of your car, then you are considered to be “upside down” on the loan. It can sometimes be difficult to find a lender that will refinance you in this case, but it doesn’t hurt to ask.
See if you can get a less expensive auto loan. Get a free, fast online auto refinance quote from CARCHEX now.
Depreciation Is Your Enemy
One reason you might be stuck in this situation is because of depreciation. This means that as time passes, the value of your vehicle drops. Depending on the make and model of your car, depreciation can quickly land you upside down on your loan.
Running A Risk
One big risk in this situation is that if your car is stolen, your insurance company will only reimburse you for the market value of your car – not what you owe on the loan. This means that in the event of theft, you might be stuck paying the difference out of your pocket.
Even if you just want to trade in or sell the car, you probably won’t get enough money to pay off the loan.
Pay Off The Loan Fast
Perhaps the best option here is to pay off the loan as quickly as possible. Otherwise you end up paying a lot on interest for a vehicle whose value continuously depreciates. You may end up having to pay an early termination fee, so check the numbers. Even after paying this fee, you still might save money on interest by paying off the loan faster.
Just because your car is older, this does not automatically mean that you are upside down on the loan. Plus, some lenders might be willing to refinance your car loan even if you are upside down. The only way to know for sure is to ask.
Banks and credit unions are common places to start looking. One potential problem with banks is that they might not grant sub-prime loans, that is, loans with a higher risk. Refinance networks are one of the fastest methods to see if you can get a loan refinanced.
A refinance network is a collection of lenders that have a single point of contact, such as CARCHEX. Through this contact point, your data is sent to multiple lenders instantly. These lenders could be banks or other financial intuitions that hope to win your business. This means that no matter what your situation, you might be able to find a less expensive loan.
If you qualify, you get a response from up to three lenders willing to offer you better terms on your car loan.
Refinancing older cars might be difficult, but it’s not impossible. Contact CARCHEX today to find out if you can save money on refinancing.
Published in CARCHEX Auto Finance Resources by CARCHEX on February 26, 2015