Is Auto Loan Refinance Right for You Colorado?

Is Auto Loan Refinance Right for You?

Auto Refinance Loan Colorado Savings

Auto refinancing can save you money by lowering your interest rate, lowering your payment, or both. Car refinancing or truck refinancing is simply the process of getting a new loan to payoff your existing loan, presumably for better terms. Unlike refinancing a house or changing credit card banks, with the right lender, vehicle refinancing should be quick and easy.

At Flatiron for example we handle everything from securing your new loan, to paying off your old loan, and completing all of the necessary title work. This is all done on line or through the mail, which ever you prefer. You never have to leave the house.

Of course just because such an auto re-finance or truck re-finance loan option exists doesn’t mean that you have to jump into it right away. Any financial decision should be based on sound logic. If you find yourself in any of the following situations, a car refinance loan may be right for you.

An Increase in Credit Score

When you buy a vehicle and make your payments on time, your credit score goes up. If you had little or no credit history, or even a few negatives in your report, you will likely wind up with a higher interest rate loan to begin. Consumers with no credit history or minor blemishes often pay interest rates in the range of 10% to 18% or even higher in today’s market. But you shouldn’t pay this high rate for any longer than necessary. Six to twelve months of on time monthly payments can be enough to improve your credit score enough for the right lender to lower your interest rate.

You Want or Need to Lower Your Car or Truck Payment

A great example might be when your mortgage broker says you need to lower your monthly bills to qualify for the home loan you are trying to get. 60 months at $525 per month may have been the smart move when you got the truck to begin with, but a truck refinance loan at $375 for 72 months may be just what you need to qualify for the mortgage. Be sure to ask, but most of today’s auto loans are simple interest with no prepayment penalty. You can always make a higher payment to payoff the loan quicker and save money when and if you choose to, but you are not obligated to the higher payment, and that can make all the difference in a monthly budget. Of coarse you don’t need to be buying a house to want to lower your payment. People re-finance car loans to lower payments for all kinds of reasons. More flexibility with your budget is almost always a good idea.

Auto Refinance to Get Cash Back

Refinancing your car or truck can be a great way to unlock equity in your vehicle and turn it into needed cash for just about any purpose. Paying off high auto loan refinance cash backinterest credit cards, student loans, or other bills with cash back from a lower interest auto loan are common examples. (The bonus with this type of loan is that installment loans secured by a vehicle are normally at much more favorable rates that typical revolving/credit card rates.) This type of loan is often referred to as a title loan, but many people don’t realize that you don’t actually have to own the vehicle free and clear to borrow against it. In this case, when your vehicle re-finance loan closes, in addition to sending a check to pay off your old loan, the lender also sends a check directly to you. The amount will be up to you as long as it is within equity guidelines of the lender.

Refinance Your Car or Truck to Remove a Cosigner

Changes in life circumstances happen to all of us. The most common reasons for removing a co-signer or co-buyer from an existing vehicle loan are probably divorce, debt to income considerations for one of the borrowers, or simply that credit has improved to the point that the cosigner is no longer necessary. In general, lenders won’t simply remove one of the signers from an existing loan. The only way to accomplish this is to write a new loan, either in one name only, or with a different co-signer.

An overall drop in interest rates

When interest rates over all are dropping, it is a definite heads up call for anyone considering the refinance of a vehicle. In fact, if rates fall by more than two or three points, you should definitely consider auto refinance even if you hadn’t thought about it in the past. Look at it this way, for most people the home mortgage is the single biggest monthly payment we make, and refinancing home loans happens everyday to save a single point in interest. If it makes sense for your biggest investment, doesn’t it make sense to at least investigate the possibility for your second biggest investment? For most of us that is our vehicle. Most people just don’t think about it, never realizing how much a few percentage points cost them, or how easy it can be to refinance a vehicle loan and save.

And of course there are reasons why refinancing your car or truck loan may not be the right solution for you.

Lenders will consider the amount of equity you have in the vehicle. If you are “upside down” in your current loan, they may decline the loan, or charge an even higher rate to offset the additional risk of lending more than the vehicle value. You should carefully consider any increase interest rate, even if the overall terms lower your payment. It may still be the right solution, but be sure to weigh the cost vs. the benefit for your situation.

You may owe so little that either it doesn’t meet the minimum requirements of the lender, or it just doesn’t warrant the effort on your part. Of course, this may be a great opportunity to consider pulling cash out of the equity in your vehicle for some other purpose. See “Cash Back” above.

Normally, the older the vehicle, the higher the interest rate. Depending on the difference in the age and mileage of your automobile between the time of your first loan and your re-finance loan, the interest rate may actually increase even if your credit score has improved. (This is simply due to the fact that lenders don’t like risk, and adjust rates accordingly.  While they don’t talk much about it, the older the vehicle, the more prone to mechanical failure it becomes. Lenders are keenly aware that if the vehicle experiences mechanical problems, the value goes down at precisely the time when the customer may be facing both a car payment and a repair bill. This means a greater probability of delinquency…more risk…and this in turn leads to the higher interest rate.) You may have a very reliable vehicle, but an increase in interest rate due to age or mileage may make refinancing unadvisable. Again, it is up to you to weigh the costs and benefits for your specific circumstance.

As always, your questions are welcome. Contact us here and we’ll be glad to help.

To apply today click Auto Loan Refinance Application it’s free and their is no obligation


From just about anywhere in the State, customers from Denver, Longmont, Boulder, Fort Collins, and Greeley, to Colorado Springs, Pueblo, and Grand Junction have refinanced vehicles conveniently online with Flatiron Finance in Loveland, Colorado.