Different borrowers have varying reasons to choose car refinance. Some may be struggling with the current loan terms or interest rate, while others may want to remove a co-signer from the deal. Regardless of the reasons, refinancing does not happen overnight. However, if you still wish to make it happen faster, here are some considerations to make.
Understand Your Reasons First
Auto refinancing requires a good deal of thought, and it's impossible to proceed otherwise. The first question you must answer is “Why do I want to refinance?” followed by, ”Am I unhappy with my current loan terms?” “Do I want to lower my car payment?” and “Is there a way to fix it without considering refinancing?”
Only by knowing what is causing you discomfort can you make a difference. Once you know your reasons, it will be much easier to look for the right lender.
Have Your Documents Ready
You must have relevant information related to your current loan terms, including:
- Duration of the loan (whether it is short- or long-term)
- How much of the loan has already been paid
- Whether you have been consistent with your current loan payment
- Your credit score and history to check for improvement
- NSA or Note and Security Agreement that shows your agreement with the lender and includes information, such as APR, loan amount and term, other associated costs like taxes, state fees, etc.
They may also ask for identification proof such as:
- Your social security number
- Your passport
- Your driver’s license
Some additional documents a lender may ask for are:
- Proof of insurance
- Proof of income – pay slip, tax returns, employer income verification, social security letter, etc. Lenders often need it to evaluate risk by calculating the payment-to-income ratio.
- Proof of residence – Your auto insurance policy, mortgage statement, utility bills, etc.
However, the documents mentioned above are not exhaustive, as your lender may request more once they approve your auto refinance application.
Use a Calculator
There are auto refinance calculators available online where you can input information relevant to your current and new loan to get an estimate of the savings you can retain every month. This way, you will be able to determine if it's worth refinancing at all.
In conclusion, rushing with a car refinance may not be a good idea. Even though the aforementioned tips will help save time to a great extent, the actual process of refinancing takes its time. This is only fair since rushing the first time did not land you a good deal either.