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Owners conducting an Automotive Property Refinance are often surprised to discover how many new attractive loan programs that have become available within the last 3 years. 30 year amortization periods, stated income and cash out refinance up to 75% LTV are now on the market.

However, automotive refinances are still heavily scrutinized by lenders that are concerned with the environmental status of the property. In addition, the special use nature, as well as the high level of seller financing (land contracts) further complicate and make lenders cautious.

Underwriting criteria is broken down into a few main categories – Loan to value, debt service coverage ratios, property analysis, tenant evaluation and credit worthiness of the borrower.

LTV – CLTV

Loan to value restrictions on automotive refinances are typically capped at 70% on rate and term and 65% on cash out refinances. However, there are a few lenders that will now allow up to 75% on a cash out basis. Lenders also will permit high leverage with seller held financing (sits in second lien position). The combined loan to value can be as high as 90%. For example, if the current first lien position existing convention loan is at 40% loan to value and the seller held is at 30% loan to value the owner could pull an additional 20% equity out on a cash out refinance (40% + 30% + 20% =90% CLTV).

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Auto refinance is one kind of a loan where you pay your current auto loan with the mortgage refinance, but with a much easier and quicker process.  The auto loan lender is a lending institution such as credit unions, banks, dealership or online auto loan lender offering auto loan. To obtain auto refinance, the lender of the auto loan requires a few documents including:

-Proof of residence and income that can be verified

-Good credit history

-Drivers license that is valid

-Valid title (used for instances like trade in)

-Personal references like family or friends

-Additional documents or “stips” like copies of bank accounts, tax returns, or phone bills.

This will be used is assessing your credit history and employment status.

When you want to get an auto refinance you will find that any auto loan lender will frequently charge clients who have bad credits or no credit higher interest rates as compared to standard rates for clients having standard credits. These auto loan rates charged frequently by the auto loan lender are based on the credit history of the client. There are different period of time in auto loan, the allowed terms of the auto loan lender are 36, 48, 60, or 72 months. In the shorter loan, the client can get lower rates but with higher payments per month compared to the loan with longer terms. The repayment fees are seldom charged by the auto loan lender, which is the charge acquired for early loan payment. It is also a requirement that the vehicle must be insured to safeguard the client’s investment for instances like vehicle loss or damage. The required insurance coverage amount is determined in the policy of the auto loan lender.  Read more...

If you’re paying too much on your existing auto loan, an auto refinance loan may be the solution. But, is auto refinancing right for you? Ask yourself three basic questions:

1. Did you obtain the original rate from your dealer who, at the time, offered auto refinance loans?
2. Is it possible that another lender, possibly a bank, may have offered a lower rate on your auto refinance loan?
3. Are you interested in increasing the equity of your car, reversing the “upside-down” trend of your car’s value depreciating faster than you pay off the auto refinance loan?

If you answered ‘Yes’ to any of the questions above, then auto refinancing may make a lot of sense. And cents. With auto refinance loans, consumers everywhere are literally saving thousands of dollars over their loan terms. Consider this example:

You borrow $20,000 at a rate of 13.4% over a period of 5 years, and then refinance after four months to a new, lower rate of 9.1%. You save $2,350 over the remainder of the auto refinance loan term.

If you financed your car at a dealership, you probably paid an interest surcharge called Rate Participation. Dealers who offer auto refinance loans will generally make money on the interest you’re charged by marking up the rate lenders provide. Sometimes this rate hike can be 3% greater than what a bank would have quoted you otherwise. In these cases, your current credit rating already qualifies you for a lower auto refinance loan rate, one that would have equated to lower monthly payments.  Read more...