How does refinancing work?

[Anonymous]

Hi guys,

There is the amazing post created by Remember0 about car financing, but he fails to address car refinancing and I can't find anything decent online.

Could someone explains how refinancing works from the inside? How does the ownership of car get from the original lender to the new lender (can't have two outstanding loans on the same car, right?)? Who takes care of all the paperwork? Is this happening online/ offline?

I really think this is very useful information that many people will enjoy!

Thanks!

[Anonymous]

I just recently refinanced 2 cars so maybe I can help.

Santandar to Cap1.  Pre-approved at Cap1 at lower rate.  Submitted papwerwork, they paid off loan and I filled out a title transfer paperwork.  Very easy and seemless.

Chase to DCU.  Approved at DCU for lower rate 4.49% submitted application had to call DCU loan officer to finalize, they sent the check to pay off and I filled out paperwork online for title transfer.  Very easy very seemless.

You must also notify your insurance carier or teh new loss payee.

While it saves money and that's good.  It can affect AAoA and will show as a new account and  1 or more new inquiries.  DCU was 1 inquiriy Cap1 1 per bureau.

Also worth mentioning that as we rebuild some might find themselves very upside down on a loan.  That makes it hard/impossible to refinance.  DCU will refinance up to 120% of the value of the car but if you start a high interest loan 20% with little/no money down it will take years to catch up and be able to refinance.

Dan 

[Anonymous]

Thanks a lot for the answer, Dan!

So Cap1 reached out to Santander directly and paid off your loan? And only after that, you filled out the paperwork online?

And DCU also sent the check to Chase directly?

Would love to hear more people with other experiences!

[Brian_Earl_Spilner]

You would normally call your lien holder and get a payoff quote which is good for a week or two. The quote would include any interest that accrues up to the end date of the quote. If you dont finish the process by that date, you will owe additional money from interest on your own. Apply and get approved for a refinance based on that amount. The new bank would give you a check to send to the lien holder. When you receive the title, you have a certain amount of time to put the new bank on it. That's how we did it at Chase. Being that was years ago, it could be different now, but knowing Chase, it isn't. I'm sure there are banks that will wire the money directly.