Refinancing Your Current Auto Loan

What is auto refinancing?  Refinancing a car is a similar concept as refinancing a home. When you refinance a car loan, you pay off your current car loan and replace it with a refinance car loan with a new lender at a different (generally lower) rate.  If you have purchased a car and were given a loan with a high interest rate, you may want to think about refinancing your auto loan for a lower interest rate.  Refinancing your existing car loan can save you money each month by lowering your car payments.

Is an Appraisal Needed to Refinance a Car Loan?

Some people think an appraisal is required to refinance their auto loan. This is not true.  When you refinance your home, you do need to have an appraisal since the loan is based on the equity in the home.  With auto refinancing, the loan is based on how much money you need to pay off your current car loan, not on the value of the car.

Bad Credit Auto Loan Refinance

If you had credit problems, refinancing a car loan might be a good option for you. You may have accepted an auto loan with a high interest rate because of a bad credit history.  But, if you have maintained a stable job since you bought the car and have been making consistent, on time payments for a year or more, you may be able to lower your current interest rate. It's worth looking into it. 

Car Refinance Example

If you financed a car loan for $20,000 over 5 years at an interest rate of 17.32% APR, the car loan payments would be $500.50 per month.  If you were able to refinance this auto loan after twelve months and decreased the interest rate to 12.43% APR, the monthly car payment would drop to $457.80.   By refinancing your auto loan, you would save $42.70 per month.  This equates to a savings of $2,049.60 over the remaining 48 months of the loan, assuming all of the installments were paid on their due date. 

 

HSBC Auto Finance

HSBC Auto Finance is a leading provider of financing for new and used vehicles and has products that serve the full spectrum of credit consumers. For dealers, HSBC Auto Finance purchases consumer contracts from thousands of active car dealers in 47 states. For consumers, HSBC Auto Finance originates or refinances auto loans through direct solicitations, the Internet and alliances. HSBC Auto Finance also services auto loans for other HSBC companies, including HFC and Beneficial branches.