DRIVERS can find their way into car loans that aren’t beneficial – but finance worker Seth Godwin posted a TikTok showing you how to refinance your car the right way.
A driver can refinance their car loan when buying a vehicle and face high interest rates, long terms, and poor banking relationships.
Godwin says, “Most lenders allow you to refinance your loan without penalty even before you make the first payment.”
Godwin says lenders are keeping this under wraps to keep their business going.
Godwin lists your first auto refinance move as an outline of how much your car is worth.
Determining the value of your vehicle will help you know if you owe more money on your car loan than the car is worth.
When you owe more money on your car than it’s worth, that’s called a car loan upside down.
Godwin says most lenders finance between 90% and 110% of a car’s value, with very few going as high as 125%.
Godwin’s second instruction on TikTok is to get your current lender’s 14-21 day payout.
Godwin notes that car loans accrue daily interest, known as per diem rates, and your new lender requires a future-dated payout to ensure the balance is covered when they send the payout.
A loan balance that is not fully repaid at a previous lender will stop title release for the new lender to add to their lien, which is more of a headache than it’s worth.
The third step is to get approved by a lender and shop that rate for comparison.
Godwin says most banks and credit unions have refinance programs, so you can find a better deal elsewhere.
Godwin’s final bonus tip is to not extend the loan term.
Extending your loan term may result in a lower monthly payment, but will ultimately defeat the money-saving purpose of refinancing unless the new interest rate is much lower.
https://www.the-sun.com/motors/5611427/tips-on-how-refinance-car/ I’m a money expert – my four tips on how to refinance your car properly