Department | Auto Refinancing

Refinancing Tips During the Credit Crisis

Are you upside down in your car loan? Owe more than it’s worth? Shelling out huge amounts of money each month for your payment and struggling to meet the demand? Perhaps you should consider approaching your bank or credit union for a refinance. The time has never been better in some ways, and more difficult in others.

Are Banks Lending?

Yes, the banks are still lending money, opening new lines of credit, and putting people in homes even today. Though U.S. automakers are struggling, the good news is that due to the credit crisis, interest rates on borrowing money have reached an incredible low. If you bought your car within the last two years or so, you should be able to get a better rate than you paid when you first bought it. The downside is that your credit needs to be in pretty good condition to get a loan today since most lending institutions have been burned recently by the factors that caused the current credit crisis.

Research Your Options

If your credit is less than perfect, you don’t want to simply shoot out applications to all the financial institutions you can and hope one accepts you. Every inquiry to your credit affects it in a slightly negative way, and searching for credit through many wild ‘potshots’ is a sure way to make your score even worse.

You should seek out the lending institutions with the most liberal policies regarding credit history. Not all banks and credit unions are the same. If you call them or research online before submitting your application or social security number, you can find plenty of information on those institutions that will loan to those with less-than-perfect credit. Once you find a few of them, list them out and compare the rates that they offer. Then send your application to the best one. If they refuse you, try the second.

A little wisdom in researching your options can enable you to find much better terms in your auto loan, possibly putting dozens of dollars back into your pocket every month. Taking advantage of the current credit situation in the world means moving smartly and saving money.