Refinancing a vehicle means a new loan is used to pay off the existing one. As a precautionary measure that the borrower does not have the ability to pay back the loan, the vehicle is then used as collateral. The refinanced auto loan is a new contract between the auto lender and potential borrower with agreed upon terms. This might included interest rate, monthly payments and loan length or duration.
The terms are going to differ case by case and may vary according to the aims and circumstances of the potential borrower. A few scenarios that come with auto loan refinance options include reduced monthly car payments, lower interest rates, longer loan terms, or shorter loan terms.
If you're approved for auto refinancing you should know that you might have to pay transaction fees. Lenders could make a charge upfront or off the option to include transaction fees with the loan amount, or which interest is charged as part of the annual percentage.
