How to Refinance a Car That Has a 2nd Lien

Second liens, while more popular for mortgages, are available for auto loans. Taking out a second lien lets you take advantage of the equity in your auto loan without affecting your original financing agreement.

Instructions

1. Contact the original lienholder on your title. Find out the amount needed to pay off the loan and clear the lien on the vehicle.

2. Contact the second lienholder and receive a payoff quote for the supplemental lien.

3. Combine the two figures to determine your total payoff amount. This is the minimum amount you need to request for a refinance to combine the notes into one payment.

4. Compare refinancing rates at several banks. Select the bank that offers you the best interest rate and most favorable repayment terms. Make sure you tell the bank that the vehicle has multiple liens on it.

5. Provide the bank with payoff amounts for each lien. Provide telephone numbers so the bank can acquire payoff instructions.

Tips & Warnings

• Check your credit history before attempting a refinance; qualifying for a refinance is more difficult than qualifying for a loan on an initial purchase.