Auto loan refinancing is one of the little known, but easy ways for people to save some pretty serious money every month. It is typically an easy process and you should not be charged to refinance your auto loan. On occasion a lender will charge a document preparation fee, but these fees are becoming less common. If you were required to pay a document preparation fee it is typically nominal and would run between $50 and $75, but as mentioned before, these fees are very rare nowadays.

The only other fee you may encounter would be a title transfer fee which is paid to your states Motor Vehicle Division. This fee will vary from state to state, but usually runs between $5 and $65.

The top 4 reasons people take advantage of auto loan refinancing are:

1) They want to refinance the car dealership’s profit out of their monthly payments.

Yes, car dealership’s can mark up your finance rate and profit substantially.

2) Their credit has improved over the course of their loan and will qualify for lower rates.

A well paid auto loan can work miracles to build / rebuild credit. Not to mention, any other improvements made to your credit file.

3) They have always had good credit and available auto loan finance rates have improved.Auto loan refinance rates are currently very low, with automotive lenders aggressively competing for loans they feel are a “sure thing” and will bring stability to their portfolios.

4) They want to refinance their vehicle to drop a cosigner from their auto loan.

This is very common for first time buyers (with over a year on the loan), people with now improved credit that needed some credit help at the time of purchase, or a couple that is separating and now only one party is responsible for repayment.

Where do you go to refinance? There are typically four main places to consider for auto loan refinancing:

1) A local bank.

2) A local credit union.

3) A local car dealership.

4) Apply online.

A local bank. You may be thinking that where you do your banking is your best source for your auto loan refinance and it may be. The only problem with your local bank is that they may not offer the best rates for your situation and you are certainly not going to get competing offers, unless you want to run around town and have your credit pulled at each new bank you apply to. You may even have your credit pulled in vain, if they don’t offer a refinance option for your credit situation or refinance needs.

A local credit union. Credit union’s typically offer very competitive rates and terms, but will you qualify? I’ve noticed that most credit union’s will set the bar slightly higher when it comes to credit and may be more apt to turn a loan down for current or past credit problems.

A local car dealership. They could be the reason you are looking to refinance in the first place. Do want to trust them, again? Not to mention, not all car dealership’s will have a refinance option available and may try to pressure you into buying a new vehicle, with once again, unfavorable terms.

Apply online. if you choose this option, there are two things to look for. First off, does this company actually refinance vehicles? A lot of the companies online claim to offer a refinance solution, but what they are really doing is collecting your information to sell off to car dealership’s. Be sure to read the fine print and know what they are doing with your information.

Secondly, once you find a company that does actually handle refinance applications, you will want to know how they share your information with the lenders they have agreements with. For instance, when you apply do they randomly submit your information to ten different lenders? If so, that’s not good! All this does is rack up credit inquiries on your credit file.

All in all, I would suggest the online route. Just be sure to apply to a company that will review your application, prior to submitting to lenders, and match you with one maybe two lenders that will offer you the best terms and rates for your situation. This way you minimize credit inquiries, while maximizing your leverage.