Refinancing your car doesn’t mess up your credit in the long run. Does refinancing your car mess up your credit? The refinance loan amount covers your existing loan plus an extra amount, which is where the “cash-out” term comes in. What does auto refinance with cash out mean?Īn auto refinance loan with cash out allows you to take some of the equity in your vehicle as cash and spend it however you want. Some lenders allow you to refinance more than your car is worth, but this isn’t recommended since you’d have negative equity in your vehicle. You’ll get cash back as a lump sum over the amount of your original loan balance. You can take equity out of your car in the form of a cash-out auto refinance loan that’s up to the current value of your vehicle. If you default on this type of loan, you risk losing your car.Ĭan you refinance a car and get cash out? However, be sure you can afford the monthly payments. To save the most money over the life of the loan, consider increasing your payment amount to pay the debt off as soon as possible. You can get a lower monthly payment by extending the loan term, but you’ll pay more for the vehicle in the end. With cash-out auto refinancing, it’s hard to pay less interest overall and get smaller monthly loan payments. Adding more to your debt at the same rate will require you to pay more interest, and refinancing isn’t a long-term solution to cash flow problems. If you can’t get a better annual percentage rate (APR) on a cash-out auto refinance loan, we don’t recommend getting a new loan. That’s why cash-out refinancing isn’t a smart way to simply get extra spending money. This will probably mean your monthly payments will stay roughly the same or increase. Lenders will check the value of your car with industry books or request an in-person inspection of your vehicle.Ĭash-out auto refinancing is only a good idea if you can get a better rate and keep the loan term relatively short. This will give you an idea of what kind of loan approval you can expect for your car’s value. You can enter your car’s vehicle identification number (VIN) to see a close estimate based on mileage and condition. Use tools like Kelley Blue Book or the National Automobile Dealers Association to check the value of your car. Your loan would automatically be upside down if you took out more than your car’s value (we recommend avoiding this). If the lender would only finance up to 80% of your car’s value, you’d get a maximum of $4,000 in cash instead.Įven though most financial institutions won’t allow you to get a loan that’s larger than your car’s value, you can still risk being upside down if you extend your repayment term too long. If you took out the full $8,000 in cash, you’d owe $20,000 on the new cash-out auto refinance loan. This means you have $8,000 of equity in your vehicle. Let’s say your car is worth $20,000 and you have $12,000 left on your loan. Some will even let you borrow more than 100%. Some lenders will finance up to 80% of the value of your vehicle, and others will finance up to 100%. You can find the equity you have in your vehicle by subtracting the remaining debt from the value of the vehicle. With cash-out auto refinancing, you can usually take out an amount up to your vehicle’s equity. The application process is simple and can be done entirely online. AutoPay also holds an A+ rating from the Better Business Bureau (BBB).ĪutoPay offers prequalification with only a soft credit check required from most lenders. The company has a solid industry reputation and strong customer reviews on sites like Trustpilot. AutoPay: 9.5 StarsĪutoPay combines low rates and flexibility of loan terms to take our award for Best Overall Auto Loan. Compare reputable companies to find the best auto loan rates. The following sections provide a closer look at these lenders, along with our overall ratings. Remember that the starting APR figures are reserved for borrowers with excellent credit.Īccording to our research, AutoPay, Consumers Credit Union, RateGenius, RefiJet and Open Road offer the best rates for cash-out auto refinancing. Deciding when to refinance a car largely depends on the interest rates available to you at a given time, whether it’s with a traditional refinance loan or a cash-out refinance loan.
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