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Car refinance mistakes | DON'T MAKE THEM!

hey what's going on everybody hope you

having a good day as always my name is

Michael and thank you for joining me

today I want to talk about some common

misconceptions people have about

refinancing their car loan all right

this is a topic I've talked about many

other videos but to this day I still get

emails and questions about the whole

process because some people are still

confused and it really is a process that

if you don't understand fully going into

it that you may actually make some

mistakes that aren't in your favor so

let me just talk about a few of these

things they're not going to be addressed

in any particular order and again if

you've got any questions still put it in

the comments section below I'm happy to

answer them for you but let's go ahead

and get started now the number one

mistake I see people make is they go

into the refinance process really only

looking to save money on their monthly

payment and I'm not saying having a

lower monthly payment is a bad thing but

I think that's the wrong way to look at

a refinance right lowering your monthly

payment helps you out in the short term

but it doesn't necessarily help you out

in the long run or at least not always

right you should look at it this way

you've got your original loan amount

right that's your principal balance but

you've also got your remaining interest

right that's determined by the term link

it's determined by the interest rate you

get and if you add both of those numbers

together that's gonna be the total

amount that you pay on the loan and

that's the number I would focus on try

and get that number as low as possible

right and if you just have a smaller

monthly payment well there's ways to do

that where you actually you pay more in

the long run and to me that's a mistake

for your personal finances right again

it's not worth paying a little bit less

each month to pay a lot more in the long

run so again really simply do not

approach this from a standpoint of I'm

only trying to save money on my monthly

payment look at the bigger picture now

tying this into the next topic let's

talk about term links because I still

have a lot of people email me with the

misunderstanding that you know

refinancing means you have to start all

over on a loan and that's not true right

let's say you got your your original car

loan for 60 months you've been paying on

it for a year so now you have 48 months

remaining well you don't have to start

all over it's 60 months right

refinancing means you're changing the

loan terms and that's going to mean your

term length it's gonna mean possibly

interest rate you know the loan amount

that you're gonna finance now is

different than the loan amount you

financed in the beginning because you've

paid off some of the principal

refinancing changes everything so if you

want to keep your term like that

well then keep it at 48 months if you

want to shorten it down to 36 months

because you can afford to do it and you

want to pay off the loan faster then do

it that's absolutely a great thing to do

I wouldn't necessarily recommend you

stretch out the long term to get a

smaller monthly payment we talked about

that earlier but if you really

absolutely wanted to you can so again

you do not need to start all over the

term link is going to be your decision

also I will say real quick that the

shorter the term length more than likely

this smaller the interest rate most

banks and credit unions are going to

give you a smaller interest rate for a

loan let's say that has 36 to 48 months

rather than a loan that has 60 to 72

months so again if you can afford to

have a shorter term take advantage of it

now the next thing we should talk about

is credit score and how it affects you

in your refinance process because way

too many people feel that like if you

don't have a perfect or high credit

score that there's no chance of it

getting approved and that's simply not

true

well credit scores have a huge impact on

whether or not alone gets approved or

not that's not to say that if you've got

a high credit score you're guaranteed to

be approved and it doesn't mean that

just because you have a low credit score

that you're going to be denied alright

there's a whole host of other factors

that go into the decision making process

like how long have you been at your job

what's your income situation like what's

your total debt load your loan to value

on your car that's a huge part of it

right just because you have a high

credit score the bank doesn't want to

make a loan for $20,000 if your car is

only worth $8,000 right and let's say

you've got a 600 credit score but your

car loan is $10,000 and your car is

worth $20,000 right

you have a much better chance of being

approved because there's less risk in

that loan so again loan-to-value how

long you've been at your job your income

total debt look all of these things go

into whether or not you get approved not

just credit score so if you feel like

hey my credit score isn't the best don't

feel deterred if all these other things

are are good positive features for your

loan application next I want to talk

about a mistake that people make when

they only try to refinance with their

current lending institution all right so

if you got the loan with bank a right

you want to try and refinance with bank

a which to me could be a mistake right

because if you've got the loan with like

a major bank more than likely their

rates are a little bit higher than

credit union

or smaller community banks and you may

be better off trying to take that loan

elsewhere right and if you're at all

interested in finding a place to

refinance check out my video down below

on rate genius they're a company based

out of Austin Texas but they work with

credit unions all over the US and trying

to help people get the lowest rating if

you've watched my channel at all for a

while like I'm a huge credit union

advocate so I absolutely love those guys

check out the link down below but again

it really comes down to finding the best

interest rate you can and if you're with

some you know major bank or let's say a

dealership that offered you a way to

have an interest rate to begin with

don't necessarily feel like you have to

refinance with those guys there's plenty

of other people that want your business

do yourself a favor and find the

institution that's going to help you out

the most the next thing we should talk

about is co-signers all right people

make mistakes when it comes to either

adding or removing a co-signers during

the refinance process and I'd say add

and remove because you may want to do

different things for different

situations right if you've got a loan

with the cosigner because maybe your

credit score wasn't the best right now

well when you refinancing your credits

improved there's no point in keeping

that other person on so you know if you

want to take them off that's the time to

do it when you refinance likewise let's

say you got the loan by yourself and

sure maybe your credits improved a

little bit and you can refinance but

maybe your wife or your husband has a

better score well if they want to add

them on at that point just because you

originally got the loan by yourself

doesn't mean you can't add a cosigner

would later on when you try and

refinance so take advantage of both of

those situations next let's talk about

something that if you do incorrectly can

mean the difference between an approval

and a denial and that is how much to

apply for now this may seem like a

really really no-brainer topic but a lot

of people have the misunderstanding that

you apply for your principal amount plus

the remaining interest right that is not

at all how you should apply for it all

you apply for is the current loan amount

and if you don't know exactly how much

that is just call up your lender ask for

a 10 day pay off and that is the loan

amount to apply for because if you apply

for you know your loan amount plus your

remaining interest then it is absolutely

not an accurate representation of how

much you owe and it's going to look like

your loan to values way out of whack so

again make sure you're applying for the

right dollar amount now the last thing

that

talk about is this idea that it costs

money to refinance right and that's not

true and if you're all trying to

refinance a car loan and this place is

trying to charge you a fee to do that do

not do business with them outside of

like maybe a title transfer fee which is

like thirty fifty dollars right do not

pay them any fee to do this loan for you

right they're incentive to give you this

loan is the interest that they're gonna

collect in the long run right this is

not like a mortgage where you're going

to have like loan origination fees or

anything like that

so really simply do not pay fees to do

your loan refinance but all in all those

are the things that came to my mind when

I look back and thought about all the

things that people misunderstand about

the car refinance process again if

there's anything that isn't clear put it

in the comment section down below I'm

happy to answer them for you likewise

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take care I'll see you all next time hey

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care and have a good day