Stuck with a high interest car loan?! The easiest way to bring down your monthly payments is by opting for auto loan refinance facility. Such arrangement can save you tremendous amount of money especially if your credit score has improved considerably or the interest rates have dropped drastically since you took the original loan. You may be able to significantly reduce your EMIs or the overall tenure of the loan.
Let’s go through some excellent auto loan refinance options you can use towards this end:
Auto loan refinance from Bank of America
Bank of America charges a fairly low APR of 2.94% on refinanced auto loans, however, the exact offer may vary from state to state and depend on the tenure of the loan. The 2.94% offer is applicable on a 60 month long loan, and the Bank of America loan terms can be anywhere from 12 to 75 months. The bank takes into account the applicant’s credit history, loan term, loan amount and whether the individual qualifies for the Preferred Rewards discounts, before setting the final interest rate.
The Preferred Rewards discounts program run by Bank of America categorizes its members into three different groups – Platinum Honors, Platinum and Gold. You must have at least $ 20,000 invested into a Merrill Lynch investment account or in a Bank of America account (separately or combined) in order to get the Gold membership. $ 50,000 gets you into the Platinum category and over $ 100,000 investments/savings makes you eligible for Platinum Honors. An interest rate discount of 0.25% – 0.5% is normally offered to the Preferred Rewards clients.
Applications for auto loan refinance from Bank of America can be submitted online without the need of any application fees. You’re not asked to pay any prepayment penalty either in most of the states. However, you may need to check about such if your loan was taken in Ohio, Louisiana or Florida.
The interest rate offered after application submission stays valid for 30 days and you can get approved online almost instantly.
The chances of qualifying
Bank of America pays close attention to your credit worthiness and the debt-to-income ratio at the time of underwriting your auto loan. The debt-to-income ratio is arrived at by summing up all your recurring monthly debt payments such as mortgage payments, credit card payments, car loan payments etc. and dividing the total by your monthly income. A lower debt-to-income ratio gives you a much better chance of qualifying for this arrangement.
Auto loan refinance from Capital One
Capital One provides attractive auto loan refinance offers with interest rates of around 2.99%. The loan tenure may range from 24 months to 72 months and the prospective clients can apply for refinancing anywhere between $ 7500 and $ 40,000. The refinanced amount can be paid off at any point of time without incurring any prepayment penalty. The application process is fairly quick and can even be completed online. The interest rate offered post the application process stays locked-in for a period of 45 days. And should you decide to go ahead, you’ll be required to provide your vehicle identification number and other important documents. You may also be asked to submit your proof of income, depending on your FICO score.
There are few other important requirements for availing this loan. The age of the vehicle under consideration must be 7 years or less, and you must be up-to-date with all your loan payments. Furthermore, you can’t refinance an already running auto loan from Capital One.
The chances of qualifying
Your eligibility for this refinance facility is determined by an automated underwriting system that’s used for reviewing all variables including the credit score. Some of the normally reviewed variables are employment status, income and whether you have an already running loan from Capital One or not. Provided that your other credentials are good enough, you may still be able to get this refinance facility, even with a fair credit score (630 – 689).
Auto loan refinance from PenFed
Auto loan refinance facility offered by PenFed can be divided into two types – refinance availed for used auto loans and new auto loans.
The interest rate provided for new auto loan refinancing can be as low as 1.49%, contingent on various factors. You’re allowed to borrow anywhere from $ 500 to $ 100,000 and the loan tenure can vary from 36 months to 72 months.
The interest rate normally applicable on used auto loan refinancing is 1.99% or more. The loan term may again be anywhere from 36 months to 72 months, and you may borrow $ 500 to $ 100,000.
You’d be asked to submit your vehicle details, gross income, employer details etc. while applying for the PenFed auto loan refinance facility. What sets PenFed apart from other credit unions offering similar facility is the fact that anyone can join this union. You’re asked to submit your membership documents during the application process. In the event that you’re found ineligible to become a member through your employer or organization affiliation, you may make a one-time donation to NMFA (National Military Family Association) or to VAT (Voices for America’s Troops).
The chances of qualifying
You don’t need a particular minimum credit score or a specific kind of credit history to qualify for PenFed auto loan refinance. Instead, the credit union takes a broader look at your current financial situation while evaluating your application. As a result, you may qualify despite having a subpar credit score, provided your other financial details such as your income and savings outweigh the shortcomings in your credit report.
Although auto loan refinance can save you plenty of money, you must do ample due diligence to ensure that it’s beneficial for you in the long run.
In addition, apart from the interest factor you’d need to carefully consider the tenure of the new loan too. The savings from interest rate reduction may not be of much use if the new arrangement increases your total number of EMIs.
All the financial institutions listed above provide refinance calculators on their respective websites, which can be used for finding out if it’ll be a worthwhile arrangement overall or not.