- What is loan-to-value-ratio?
The loan-to-value ratio is a comparison of the loan amount to the value of the vehicle. The value of a vehicle can be found by consulting an auto industry pricing guide such as NADA or Kelley Blue Book.
2. Can the interest rate on my loan contract be changed?
You may be able to change your interest rate if your contract is set up that way. Terms vary by provider so to find out if this is possible, talk to a professional to see if the change is allowed. Although this may be an option, if you are looking to lower your interest rate or monthly payment, refinancing your loan might be your best option.
3. Are there any costs for refinancing?
Typically when you refinance you pay off the existing balance and then sign a new loan with new terms. When you refinance with a new loan, you incur and have to pay many or all of the same costs you paid with the original loan. You’ll want to take this into consideration when deciding if you are ready to refinance.
4. How do I benefit from refinancing?
By refinancing your auto loan, you may benefit from more flexible payment terms, lower monthly payments, interest savings, or even shorten the duration of the loan. Any of these options have the possibility of saving you hundreds of dollars over the life of your loan, which could help your budget and save you money.
5. Do I have to wait a certain period of time before I can refinance?
No, there is no certain required waiting period when it comes to refinancing. You may even refinance more than once in a matter of months.
6. If I have already refinanced my home or vehicle once, can I do it again?
Yes, you can refinance your home or vehicle more than once and it may be very wise to do so if interest rates are steadily falling.
7. Should I use a home equity loan instead of an auto loan?
Home equity loans are a great alternative to an auto loan. You can usually get a lower interest rate with a home equity loan than you can with an auto loan. What makes it even better is that the interest you pay on a home loan may be tax deductible.
8. What does APR stand for and what does it mean?
APR stands for Annual Percentage Rate. The APR on a loan includes the costs involved in securing the loan such as the interest rate, points and other related fees you will be paying annually. The APR is meant to provide you with a rate to use when comparing loans.
9. What is the difference between APR and the interest rate of a loan?
The interest rate on a loan is the cost for repaying the amount you borrowed, multiplied by a certain percentage that the bank charges you for the time it takes you to pay it back. The APR includes all the costs the bank charges you plus the interest rate and the amount of the loan. When comparing interest rates from lender to lender, you want to look at the APR as it is what lenders use to figure your monthly payments.
10. What is a lien holder?
A lien holder is the institution (usually a bank) that has the right to take and hold or sell the property of a debtor as security or payment for a debt borrowed from them.
11. What is a title search?
A title search is a search that reveals any liens, lawsuits or legal claims involving the property that is going to be bought or sold. Lenders often require a title search.
12. What is Title Insurance?
Title insurance is required by lenders. It is protection for the buyer and lender if there are complications with the title after the deal has been made.
13. Do credit bureaus approve me for a loan?
Credit bureaus do not approve you for a loan, but they do provide lenders with copies of your credit report. This is what most lenders use to base their decision on for whether they are going to grant you credit or not. Credit bureaus do not make the decision for the lenders. It is up to that lender to decide what the acceptable criteria is for them.