• Reduces the monthly installments: Refinancing can significantly bring down the monthly payments towards your car loan. Having low monthly payments allows you to manage your household finances more efficiently and make savings at the same time. You can even invest your money to receive significant monetary returns in the long run.

• Can decrease the interest rate: Apart from low monthly payments, car loan refinancing can also help in decreasing your interest rate. You can get the new loan at a lower rate of interest from another lender. The lower rate of interest brings down your overall repayment amount you owe to the lender.

• You can alter the length of loan: Though long term loans equate to lower monthly payments, you end up paying more interest to the lender. However, if you opt for refinancing your car loan, you can change the loan term and the monthly payments that go with it.

• You can own a car previously on lease: If there is an instance where the lease on your car is about to finish, you can purchase it by choosing the option of auto refinancing. The loan obtained from refinancing can be utilized to buy out the lease and give the payments to the lender. You will be the owner of the car when the loan term ends.

A secured auto loan is one in which there is collateral offered against the loan, which gives the lender higher security, hence resulting in better loan terms for the borrower. In most cases, the collateral in a secured auto loan is the car itself. That means that if, for any reason, the borrower is unable to make complete payments of the car, the car is repossessed by the lender. In some cases, the lender might require something more than just the car to be offered as collateral. This could include assets owned by the borrower, like a home, boat, land, etc.

A borrower has to fulfill certain basic requirements to get approval for a secured auto loan. These include:

• Proof of income- It is mandatory to have a verifiable income in order to be eligible for a secured auto loan. You could submit proof of income in the form of paycheck stubs, copies of tax returns, bank statements, etc.
• Steady employment- You must have had a steady source of income. If you do not have proof of steady employment, you might need to show proof of some other verifiable source of income, such as a personal business, inheritance, etc.
• Residency- You must have had lived in your current residence for at least one year. If you have just moved into your home, you need to show your prior residence proofs.

The greatest advantage of getting a secured auto loan is that the rate of interest for such a loan is significantly low, as compared to that for an unsecured loan. In addition to this, you can also expect to get more favorable loan terms, such as increased flexibility, on such a loan, since the lender has greater security in such a loan. Moreover, since the car is offered as collateral, the lender is generally more relaxed in terms of the amount of income of the borrower, or how well the income shows on paper.

When opting for a secured auto loan, you need to be sure not to default on your loan payments. By completing the loan payments till the end of the loan term, you can end up saving a lot of money as compared to if you had chosen an unsecured loan.