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Cash Out Auto Refinance

Can you help me find a lender that will do a cash out refinance for an auto loan?

I own a 2004 auto. I owe $4,200 and the retail value is $9,500. I would like to refinance and take out a little cash. Do you know of banks that offer cash-out car refinance or a cash out refinance for an auto loan?

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Highlights

  • Cash out refinance auto loans are challenging to find.
  • If you own a home, consider a traditional mortgage refinance to payoff debts.
  • Debt consolidation loans sometimes work as well for auto loans.

yes, banks offer cash-out refinance loans. however, you must have equity in the vehicle and a good credit history to qualify. visit the bills.com refinance loan page to see if you qualify for a refinance loan.

auto refinance

mortgage refinance is not the only kind of loan refinancing. a car loan can be refinanced as well. after purchasing a vehicle, people often find themselves with financing terms that are not favorable. this typically means a high interest rate loan, a high monthly payment, and ultimately, a more costly car than one would want. most consumers end up with these loans because they may have not had stellar credit at the time of purchasing the vehicle or they were unaware of the actual financial impact caused by the original loan’s fine print. luckily, refinancing offers a solution to this situation, especially if the consumer has improved their credit score since buying in the car.

loan to value (ltv)

loan-to-value (ltv) refers to the percentage that results when the amount you owe on the loan is divided by the vehicles value. thus, if your loan is for $8,000 on a vehicle that is valued at $10,000, your loan to value would be 8,000 divided by 10,000 or 80%. that also means that you have $2,000 of equity value in this scenario, or 20% equity. equity is determined by subtracting the amount owed from the value of the home and would also register as a percentage when the difference is divided by the value of the home.

ltv is important because lenders view this as one of the key risk factors in determining whether to lend to a borrower. if a borrower defaults and the vehicle and it goes to auction, as a result of repossession, the lender may incur a loss if the ltv is relatively too high. however, if the ltv is relatively low the lender is at a lower risk of taking a loss, which makes it more attractive to lend to the borrower.

those that are considering refinancing must keep in mind that they do not want to wait too long after the purchase of the vehicle to apply for a refinance. autos are depreciating assets. the more mileage a car has, along with wear and tear, the lower the value of a car. just as in the case with mortgage refinancing, the loan-to-value is an important consideration for lenders. furthermore, consumers will start saving money faster the sooner they refinance their auto loan to a lower interest rate loan.

credit

credit scores help creditors determine their risk if they choose to lend you money or extend you credit. your credit report contains your history or a personal record of past payment on trade lines and accounts. this history is used to predict a person's likelihood of making payments on time.

many people do not think of refinancing their vehicle because they believe the loan that they received when they purchased the vehicle was the only loan they could qualify for. if the consumer has been able to make their monthly payments on time, since acquiring the vehicle, it is possible that their credit scores have improved. if this is the case, and the credit scores have increased substantially, then it is important for consumers to refinance out of an auto loan that has a high interest rate.

if a consumer is aware that their credit may not be good enough to refinance, they can find ways on how to build credit.

low interest rates

if a consumer has an interest rate that is above 5% then they should look into refinancing their auto loan. many consumers with excellent credit have been able to obtain auto loans within the 0% to 3% apr range. nowadays there are plenty of loan calculators online that show consumers what their monthly payments would be if they were to refinance at a lower rate. refinance your auto loan and see how much you can save.

it is probably also a good idea to check out general information on auto loans at the bills.com resource page that can help you find a lender that may be able to refinance your auto loan. keep in mind every lender is different and guidelines for lending change often.

if you cannot qualify for a refinance and own you vehicle outright, you can get a title loan. however, terms for title loans are usually expensive, and for that reason i do not recommend title loans.

i hope this information helps you find. learn & save.

best,

bill

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3 Comments

Recent Best
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  • 35x35
    May, 2010
    Ray
    Wells Fargo offers cash out refi
    0 Votes

  • BA
    Mar, 2010
    Bill
    You can apply for a free auto loan quote at https://www.bills.com/auto/loans/. For more information on auto loans in general, I recommend that you to visit the Bills.com auto loans resource page (http://www.bills.com/auto-loans/). Remember that every lender is different and guidelines for lending continually change depending on market conditions.
    0 Votes

  • PH
    Mar, 2010
    Phong
    I own a Mazda Tribute Auto, year : 2005 , I owe 4700 and the retail value is 10500....I would like to refinace and take out a little cash...do you know of banks that offer cash-out car refinance?
    0 Votes

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