High Risk Auto Refinance
High risk auto refinance deals can be made through multiple lending institutions that want a piece of interest from those that are being charged outrageous rates because of bad or no credit. During a high risk auto refinance deal, a lender will need information concerning employment, credit, and previous loan arrangements. Detailed information about the car will also need to be provided. Auto refinancing is based on the amount needed to pay off the original loan, not the amount the car is worth, however, most auto refinancing lenders, will not refinance a car that is over 10 years old.
The first step in obtaining a high risk auto refinance loan is to pull a credit history on yourself from all three national credit reporting agencies. These agencies are Equifax, TransUnion, and Experien. The new interest rate sought is directly influenced by that magical number on a credit report. Some lenders use the number from only one agency; others use an average of all three. Regardless of the method a lender uses, pulling your own report will save time and negative points on your credit report than if each lender pulled their own. Once you, the consumer have the credit scores, research for the best rate can begin.
With a simple phone call, a consumer interested in a high risk auto refinance loan can get all the information they need to make an informed decision. This can all be done before even applying for the loan. For a high risk auto refinance applicant, a better interest rate can mean a tremendous decrease in not only the interest being paid over the life of the loan, but of the monthly payments being made. It is advised to keep an eye on the fluctuating interest rates online. Printed information can not keep up to speed with interest rates which change daily. Finding a good website to check interest rates should be a priority.
Take for example a man who was considered high risk because of bad credit. He bought a car for $16,500 with a horrific interest rate of 21% for 60 months. This man's car payment is $446.38 per month. If he chooses to apply for a high risk auto refinance loan within the first year of payments, he may be able to lower his interest rate to 6%. This would drop his monthly payments to $318.99, thus saving him $7,643 in interest over the life of the loan. There are many other things that man could spend $7643 on besides interest to a lender. The best advice for those who seek a high risk auto refinance loan is to keep looking and not get discouraged, there is a lender out there that will refinance you.