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Does My Car Or Truck Qualify For An Auto Refinancing Loan?
By EchoBay Loans Staff Writer

Are you looking to refinance your car or truck and wondering if your vehicle qualifies for a refinance loan? For the average driver, the simple answer to this question is yes. Auto refinancing can be done for a variety of reasons. Some people wish to lower their payments by extending their term or lowering their interest rate. Others have decided to pay off their car sooner and shorten their term all while taking advantage of a lower rate. If you had bad credit when you originally took out the loan but your credit has improved since, this may also be a great reason to consider auto refinancing. Let's look at some of the common questions asked about car refinancing.

What kind of car can be refinanced?
Generally, any vehicle used for non-commercial purposes can be refinanced.
Typically you cannot refinance a car that has been rebuilt, a salvage, a recreational vehicle or any type of camper. Any car that is used for commercial purposes will also not be eligible for auto refinancing. This would include limousines, dump trucks, taxis, tractor-trailers and freight liners. Most lenders will not refinance these types of vehicles under a traditional auto refinancing program but there may be other programs available.

Can I do a lease-buyout?
Some lenders will finance your lease buyout. This is true whether it is for a car or a truck. A lease buyout is when you choose to purchase your vehicle at the end of the lease rather than turning it back in. Many times your lease finance company can help you arrange this type of car refinancing if you decide to do a lease buyout. You can also apply online for a lease buyout car refinancing loan and be approved in a matter of minutes. Most online lenders provide flexible loan terms and no loan fees for a lease buyout.

Can I get a cash-out refinancing loan?
Typically, lenders do not offer cash-out refinancing loans on cars or trucks. This is very common in the mortgage market though. For homeowners, a cash-out refinance can be a way to lower the interest rate on their home and take advantage of the equity they have built. This is not, however, an option for auto refinancing.

Is there a minimum amount I must refinance?
Generally, there is a minimum loan amount. These loan amounts can vary by state and by lender. For example, in Arizona, the minimum loan amount is $10,000.01. For most other lenders the minimum is between $5,000 and $10,000. There are some maximum amounts as well but unless you are driving the newest Ferrari, most car owners would not have a problem with this.

What does the lender expect of me?
As with any other loan, you will have to qualify for the loan as well. Car refinancing can have stricter terms than a traditional new loan. First, you will be expected to have good credit. You can check your credit beforehand if you wish by requesting a copy of your credit report. It is important to clear up any errors on your credit report before you apply. Second, the lender will check to see that you meet minimum income requirements. This will most likely be based on your gross income which can be proved through tax returns or pay stubs.

Some lenders may also require that you have been with your job for the past two years or can prove a steady stream of income for the last two years. Last, the lender will be looking at your debt to income ratio. This ratio tells the lender how much of your income each month goes towards debt payments. The ratio is calculated by dividing your total monthly debt payments by your monthly gross income. The lower your ratio, the better chances you have for approval. Only your loan and credit card debt will be considered in this calculation.

As you can see, for the average consumer, auto refinancing is an available option that can be done with minimal cost or time and can result in large savings. Be sure to check out your options and shop a variety of lenders to find the best deal for you. Beginning your search online, at your credit union or bank should get you on the road to savings.

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