A Guide to Auto Refinancing


Many people associate financial changes with stress, especially when it comes to refinancing a loan. Some expect the process to be a hassle, some stress because they don’t know what to expect, and, more rarely,  some feel perfectly comfortable. Regardless of which category you identify with, we created a guide that should provide you with helpful knowledge to keep you informed about what to expect, make the process as simple as possible, and, of course, to help save you money.

1. Do it sooner than later.

Because interest accrues every day, and since  your vehicle becomes less valuable with every mile, the longer you wait, the higher loan-to-value (LTV) ratio you’ll have. LTV is an important factor for lenders when deciding to make you an offer.

2. Expect to have paperwork. 

No matter whether refinancing with rateGenius or another company, paperwork is a tedious, yet necessary, part of the process. Refinancing requires the coordination and cooperation between different lenders and bureaucracies across the United States, which can sometimes require extra documentation and a bit of patience. Luckily, we do our best to alleviate as much stress as we can by handling the rest of the process.

3. The process is typically quick, but sometimes it can be tricky. 

This is the case especially for lease buyouts and for transfers of ownership.

4. Apply with accurate information. 

This is one of the most important things to keep in mind, as it can determine the ease of your refinance process. Lenders base their decision and offer on the information provided in customers’ applications. Sometimes, however, once customers complete and submit the documents for their accepted offer, the information does not match their application. This can result in rescinded offers,  therefore requiring new approval (or not), and new documentation to coincide with that approval. This significantly delays the process, and will likely result in a different rate than you originally agreed to. Always make sure that what you enter into your application is correct; that the name you enter matches your driver’s license, and that you list your income and vehicle’s mileage with 100% accuracy.  

5. Do your own math. 

This is a general rule of thumb for all things financial.  Though we provide accurate and in-depth explanations of loan terms to our customers,  it always feels reassuring to do the math yourself to make sure you understand and agree to the terms.

6. Keep making payments.

 If you have any payments due during the interim between your old loan and your new loan, still make the payment. If there are any funds left on your old loan after your new lender pays it off, your old lender is legally obligated to return that money to you. 

7. Credit is a factor, but not the only factor. 

Many customers believe that if they have great credit, that they’ll be automatically approved for a new auto loan. However, that’s not necessarily true. Though credit is an important consideration, lenders mostly care about things like DTI (debt-to-income ratio) and LTV (loan-to-value ratio). DTI is essentially the lender’s assessment of risk in your ability to afford the auto loan payments. LTV is your lender’s determination about how much you owe on your previous loan versus how much your car is worth. Put another way, it indicates your proximity to being upside down on your loan.

8. Select automatic payments. 

Many lenders offer perks for customers who select automatic payments on their new loans. Some perks include lower auto loan rates, which can save some people hundreds of dollars over the life of their loan.

From the Desk of Roger Douville

Lending Policy Pitfalls

Of course you must have loan procedures that provide your lending staff the guidance they need to make sound lending decisions for your institution. However, I suggest your procedures should be structured much like how Captain Barbossa (from Pirates of the Caribbean) views “Parley” – the rules are more like “guidelines”.

In each lending institution, there is always at least one staff member who takes these loan procedures literally. They are the sticklers for procedure; the black and white brigade; the “no gray area there” people. Much time is likely spent coaching them about what makes each loan applicant’s circumstances unique and how to find a way to approve a loan rather than deny a loan request in haste.

But have you ever considered the members of your staff that use your loan procedure to make ill advised loans, just because they can? Just because your loan procedure allows you to go to 50% debt ratio on a 710 Beacon Score, doesn’t mean you should! Does the exception for LTV make sense for this borrower with this collateral for that term? Every deal is unique and one-off. Your underwriters are there to mitigate risk while providing yield. Remind them to look into the deal rather than at it.

All the best,

Roger Douville

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Changing lender focus

Auto loan rates to rise in 2018: What it means for you


As we enter a new year,  economists have made their official predictions about what 2018’s auto industry has in store. Overall, interest rates will likely increase for subprime borrowers.

In recent years, lenders have offered decent rates on auto loans, even to subprime candidates, in order to boost sales and respond to the increasing price of new cars. However, the Federal Reserve increases interest rates if they believe there are too many risky loans funding sales. This increase in meant to deter subprime borrowers to prevent another loan bubble like the infamous crash in 2008.

In an article in Forbes, credit-reporting agency TransUnion forecasted that lenders will continue to prioritize lending towards “lower risk, better-qualified borrowers” in 2018.

So, what does that mean?

According to the Washington Post, these increased rates should only slightly effect rates for those with good credit. However, that may not hold true for riskier borrowers. Auto loans, especially on new cars, may be unaffordable for many within this group. Some trends that may arise from this shift are:

  1. Bigger down payments.
  2. Purchasing used cars instead of new.
  3. Longer loan terms.

With these predictions in mind, it’s important that you make the best choices for you and your wallet when considering a new (or used) car. And not to worry – refinancing can help. 

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3 ways to achieve your financial New Years Resolution

With the New Year upon us, many Americans will make various resolutions to improve their mental, physical, emotional, and/or financial health. Because old habits die hard, many consumers will break their resolutions within a couple of weeks. But, for those resolving to have better finances next year, taking steps early on can help you achieve and maintain your goals for the rest of the year.

Below are three great ways to cut down your expenses that can have long-term benefits for you budget.

  1. Refinance your loans. Mortgages, credit cards, and of course auto loans, could all have the potential for refinancing. Changing either the interest rate, loan term, or both, puts money back into your pocket in both the short and long term. The best way to get the more competitive rate on your new loan is to shop around. For auto loans, we do the shopping for you.
  2.  Trim the fat. Though the literal definition of that phrase may apply to another resolution, in terms of finances, we mean it figuratively. Many of us survive on our television sets complete with cable or satellite packages with “the works”, enjoy our monthly subscription boxes with trinkets and material things, and feel we need to go out to eat in order to appreciate our meals. For those of us on a tight budget, these luxuries can be eliminated to make way for more important expenditures (or saving).
  3.  Shop more consciously. Grocery shopping is an essential part of our survival, but many of us overspend in order to satisfy our more expensive cravings. In addition, many Americans seem fixated on purchasing specific brands in order to maintain a certain persona. Coupon clipping, price comparisons, and brand swapping can add up quickly in your wallet’s favor.



Edmunds: December best time to buy new car


Consumers interested in buying a new car may want to consider making the purchase by the end of the year, as Edmunds reports that “December will give you a ‘perfect storm’ of savings”.

Other than on Black Friday, the common perception about shopping during the holiday season is that most items are fully priced. As demand for certain goods increases, so does the price. Because items are already selling without being discounted, many vendors do not see a need to put certain items on sale. However, if the product does not stand out against its competition in a sea of demand, vendors will use incentives in order to make the product more enticing.

For the auto industry in December, this is the case. Dealerships’ push to sell at the end of the year is created by various factors, all of which benefit smart shoppers looking for a bargain.

The main factor that makes December great for car buying is that it typically falls in a transition period between old model year and new model year vehicles. This creates two things. First, it creates a system of lesser value models in comparison to more upgraded models. This makes the older models more difficult to sell because of the upgrades in the newer model, but it also makes the newer model more difficult to sell because of its higher price. Second, it creates a large inventory, thus motivating dealerships to rid of the older models and make room for the new year’s lineup.

Furthermore, consumers sometimes purchase cars as gifts during the holiday season. And it’s a buyer’s market. There’s more inventory than usual, so each dealership is doing their best to entice customers to choose their brand. This means deals, rebates, and discounts!

Lastly, just as salespeople have monthly sales goals, dealerships have yearly sales goals. Because December is at the end of the year, many dealerships strive to meet their quotas. So, they advertise great deals to get people in the door and to get cars off the lot.

The above three factors give buyers more negotiating power, more selection, and of course, better prices. So, if you’re in the market for a new car, this might be the best time for you!

If you’re not quite ready, consider refinancing your auto loan instead. It’s a great way to keep the car you have while reducing your interest rate!