Questions and Answers about Refinancing

Questions & Answers- Refinancing

Katie has some questions about refinancing a new car she just bought. Refinancing is something most people have heard about but how do you actually go about doing it? Find out in today’s episode! 

[2:6] What is refinancing and why would I want to do it? Refinancing is swapping out one interest rate for another, e.g. you are currently paying 8% pa, instead you want to pay 6% pa. Say you take out a loan with bank ABC, you can refinance with bank XYZ and they’ll give you a better rate. In essence the bank buys you out. Does the 2% saving make a difference? Yes!

[5:45] Where can I go to refinance?
Anyone that can ordinarily give you the first loan can typically give you the second loan.
Some good resources are Credible or Sofi.
Credit Unions are a great place to start

[7:1] What documents do you need to have ready?
Do your homework and prepare before you get finance, know your credit score!
Are you in a good position
Have paystubs on hand
Know how much your average monthly expenses are

[9:13] How long does the process take?
Take a step back, you can refinance any time and you can refinance multiple times.
Even before your first payment!
 If you do go the refinancing route, banks will want to know that you’re in the money, you can’t be upside down on the loan (market value on the asset is worth less than your loan)

[11:15] What can I do if I don’t get a lower rate?
You can refinance as many times as what you want. If you don’t get approved first determine why you didn’t get approved, did rates in the market go up? Do you have a bad credit score?
It’s definitely not the end of the world, but you are going to take a hit on your credit