How Does Auto Refinancing Work?

Video Transcript

"So you borrowed a car, and you're thinking about refinancing. First off you want to make sure that you are eligible to get a loan. Hi, I'm Carrie Kukuda the SomedDay Coach. To know if you're able to get a loan, you want to look and see if you're credit score is at least a 600, so you're going to need to pull your credit and know your score as well. If you are eligible to do that, it's just like a home loan. What you're going to do is you're going to pay off your current lender, whether it be the same lender that you're using, or that you shopped around, or you will use a different lender that maybe has a better interest rate and a lower payment for you. So shop around and look into that. It is a collateral loan, so they can take it, so you want to be sure that you are able to afford it. And if also you're going to do a refinance, do it early in the loan process. Say you cleaned up your credit, you're paying 21 percent because you're credit wasn't so good when you first applied, and now you've cleaned up your credit and now we're down to say 7 percent for a loan, you're going to save a lot more money in the beginning because interest comes out more in the beginning of the loan than it does at the end. So shop around, look and see who has the best rates, make sure you know your credit score, and good luck. Carrie Kukuda, the Someday Coach."