I’m a Money Expert – My Four Tips for Refinancing Your Car the Right Way
DRIVERS can find their way into car loans that aren’t great, but financier Seth Godwin has posted a TikTok where he shows you how to refinance your car the right way.
A driver can refinance his car loan when he buys a vehicle and experiences high interest rates, long terms and poor banking relationships.
Godwin says, “Most lenders allow you to refinance your loan without penalties, even before you make the first payment.”
Godwin says lenders keep this a secret to keep your business going.
Godwin lists your first auto refinance step as describing the value of your car.
Determining the value of your vehicle helps you know whether or not you owe more money on your car loan than the car is worth.
Owing more money on your car than it is worth is known as being upside down on a car loan.
Godwin says most lenders will finance between 90 and 110 percent of a car’s value, with very few going up to 125 percent.
Godwin’s second instruction on TikTok is to get the 14-21 day refund from your current lender.
Godwin notes that auto loans accrue daily interest known as per diems, and your new lender will require future payment to ensure that when they send payment, the balance is covered.
A loan balance that is not fully repaid with a previous lender will stop the release of title for the new lender to add to their lien, which is more of a hassle than it is worth.
The third step is to get approved by a lender and buy 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 term of your loan.
Extending the term of your loan may give you a lower monthly payment, but will end up defeating the money-saving purpose of refinancing, unless the new interest rate is much lower.