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Tactics for Lowering Loan Rates That are Difficult to Refinance

Taking out a loan can be a great way to get the things you need in life, but it can quickly turn into a financial problem due to unforeseen events. When economic downturns occur, it can put a huge dent in your savings, making it hard to stay financially afloat. When the market shows lower interest rates, it can be very tempting to refinance the loans you have. This could actually save you hundreds or even thousands of dollars, depending on your loan size, while at the same time lowering your monthly payment. All of this seems like a great financial move, but this isnق€™t always possible. There are some loans that are difficult to refinance. If youق€™re facing this problem, you will have to learn alternate ways to deal with your finances.

Refinancing an Auto Loan

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If you currently have a loan for your vehicle, you may find that it is very difficult to refinance. This can be true for owners of a brand new car and those with a not-so-new vehicle. The reason for this is because you likely owe more on the loan than what the car is actually worth today. In addition, the lender may not want to be stuck with the car if you end up defaulting on your loan, since the value of it is so low. Lenders typically look to give loans to folks with good credit and income so a lender will be more likely to refinance a loan for you if you have good credit and sufficient income to handle it. This is great, but you could end up having to take out a five-year loan on your three-year loan, which brings down your monthly payment, but extends your loan. If you decide to refinance, make sure to check the rates with three different lenders, like an online lender, credit union and local bank. If nothing works out, then you should sell the car yourself or get a personal loan to pay off the rest.

Refinancing a Mortgage Loan

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The real estate market today shows that there is some recovery, but there is still an estimated 14 million homeowners who have properties with negative equity. This means that their homes are worth less than what they owe to the bank. An estimated 2.3 million homeowners have home equity that is less than 5 percent. If you are faced with low to no equity on your home, then youق€™ll find that itق€™s difficult to refinance your mortgage.

If you have a Fannie Mae or Freddie Mac loan, you could possibly use HARP (Home Affordable Refinance Program) to help you refinance your loan so that it will have a lower monthly payment. A lot of lenders arenق€™t interested in this program. If you do happen to find one, you may end up having to pay mortgage insurance for a very long time. If you donق€™t have a loan with Freddie Mac or Freddie Mae, you just may be stuck with your mortgage. If youق€™re unable to get refinancing, you can opt to sell your home in a short sale, get a loan modification or try to file for bankruptcy.

Refinancing a Student Loan

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Another loan thatق€™s difficult to have refinanced are student loans. Itق€™s possible to have it done, but the process can be a bit tricky, depending on the type of loan you took out. For instance, if you have a federal student loan, then you can try having it consolidated, but this can only be done one time. So if you have multiple student loans out, you can combine them into one loan once. Loans that have variable rates can be combined into one loan with a fixed rate, which has a repayment period thatق€™s up to 30 years. This could mean you paying more in the long term. Or you could end up losing benefits like discounted interest rates or loan cancellation benefits that are typically available with some types of loans.

Those who have a private student loan and a good credit rating and steady income can typically have their loan refinanced. However, a one percent charge for the origination fee is added to the loan. Make sure to shop around for a lender that can offer consolidation loans at a great rate.

Having a loan refinanced can be a great way to save money right away. However, if youق€™re not careful, you could end up in a longer term loan, paying more money than you would have. So make sure that the loan is worth refinancing and that it suits your financial situation.