How to Refinance an Auto Loan

There are many reasons why you would want to refinance an auto loan. One of the main reasons is to lower the price of the payment on the vehicle. This is a good reason if you can not afford the payment on the vehicle already. Be careful since one of the main ways to reduce the monthly payment is to extend the length of the loan. This will make you pay more money in the long run, so make sure it is necessary to do so. Another reason is that the first place that gave you a loan has some very unfavorable stipulations, like not being able to pay on principle, a high early payoff penalty, or some other charges being added besides the interest. This would be a good case to find a new place to finance a loan so you can get out of those unfavorable stipulations. It would probably be good to get a monthly payment that is actually easy to pay extra money on per month. This will help payoff the loan in a much shorter time span. It will also allow you to pay less interest over the course of the loan as well. One thing to consider before going any further would be the state of your credit score. Make sure that it has risen around 50 points from when you got the loan in the first place. This doesn’t always have to be the case and with some looking around at banks you may be able to find one that will refinance the loan with more favorable stipulations. However, it will probably be safer to raise your credit score some before trying.

If you don’t know how to raise your credit score check out my post on “How do you build your credit as a college student?”. The advice can be applied to non college students as well.

Where do I get the Loan?

After determining if the idea of refinancing the auto loan is a good idea you have to find a bank or credit union that will refinance the loan. It will probably be easier to get a loan from a local bank that you have an account at and if you don’t go to a local bank it may be good to try whatever bank you have an account with first. After that you can try looking into local credit unions, because they usually have better interest rates then most banks. It is definitely preferable to talk to someone in person in order to get the process going. If you meet someone in person then you can tell them about your circumstances and they may be able to give you an idea if you will actually get the loan or not. This can keep you from getting your credit checked multiple times while trying to find a bank that will give out the loan. Make sure to also ask them about there terms for refinancing loans. It would do you no good if the new loan also came with stipulations that were unfavorable. Make sure it is easy to pay on principle only and that there are no extra fees per month for each bill. Another thing to check is how much they will charge for paying off the loan early.

What Do I Need?

Depending on where you get the loan will depend on the paperwork that they will need. Here is a list however that should cover most of the basic paperwork you will need to print off before going to the bank.

Drivers License
Title of the Vehicle
Registration of the Vehicle
Proof of Insurance (Possibly)
At least 2 years of Residency information
Current Job
Pay-stub (Possibly)

Betterment: Is it right for you?

Betterment is an investing app that is all about hands off investing. Essentially you are able to set up a goal that you want to reach and then just deposit money into the account. It will give you an estimate in how much you need to put into the account in order to meet the goal that you have set. If you don’t have a specific goal then that is alright. You can use it as a savings account really, just because the savings accounts that banks offer have no real value anymore. The app allows you to even set up automatic deposits from a bank account, which means you really don’t have to think about saving money. I would suggest that whatever you plan on saving per month that you actually split that up into weekly deposits. One of the reasons for this is because it seems like Betterment doesn’t want to readjust your investments until you put more money into the account. This means if you do it weekly then it should keep adjusting the account in order to operate better. Also putting money in weekly usually means you will actually put in more money by the end of the year then if you did things monthly. I wouldn’t spend a lot of time at first looking at what the account is doing because nothing is really going to change until you have at least $1000 in the account. After that point you may want to start keeping an eye on the account, about once a month at most. Even then it won’t seem like to much money will be earned, but this account is for long-term savings really. Don’t bother trying to do short-term savings with this type of account. Overall Betterment does what it sets out to do and even though you won’t get crazy returns on your money it should at least be a better place to stick excess money then a savings account.

Do you have any experience with Betterment? Let us know in the comments.

How do you manage your money?

This is a very difficult question to answer and there is no one solution. I can only tell you what is helping me. The main thing that I do is keep track of everything that I spend money on by the use of an app on my phone. So anytime I spend money on something I immediately input that into the app. At the end of the month I export that data to a computer and make a spreadsheet that has my total amount spent for the month and then I input what I made that month. I figure out the difference between the two and see if I made money that month or lost money. The little app has a pie chart that displays how much I have spent on each category. I don’t actually have a budget and that works for me because just the sight of the pie chart gives me an idea of if I need to stop spending money. Some people will work better with actually making a budget and telling themselves that they only have that much money to spend on this certain category. This to me is to restrictive and so I like to just make the decision to buy something or not based on how much I have already spent for the month. This may seem like a simple thing to do, but it is hard to be dedicated to doing it and it has a huge impact on how much you actually spend.

You may also be interested in the post: “How do you build your credit as a college student?”. You don’t even need to be a college student, since it will work for everyone.

How do you build your credit as a college student?

Credit is a mysterious thing, but what is not mysterious is that it is very important for your long-term financial health. One thing you can do as a college student is set up an account with credit karma and see what your score is and what kind of credit cards they recommend. Try to find a card recommendation that does not have any annual fees and a low-interest rate. Also try to sign up for the card before you take out any loans. This is because when you take out student loans for a period of time it will be factored into the decision of them giving you a credit card. Once you finally have a card find out the maximum credit on the card and calculate what 30% of that would be, this will tell you how much you can actually spend with the credit card. This probably won’t be a lot of money at first since the maximum credit will probably be around $500 and 30% would be $150. Basically just use the card for getting gas for your vehicle and make sure you do not go over the $150. If you go over that amount then your credit will get dinged. Be sure to connect the card to your bank account it can be paid automatically when the time comes each month. This will allow you to never miss a payment, which will help your credit score. Keeping this card through your college career will greatly help you because then you will have at least two open lines of credit for a few years. There are other things that can also be done, but this is one of the easiest things to do in order to help build your credit.

How do you pay off student loans?

This topic may not be directly related to the field of software engineering, but it definitely has an impact on most. There is no easy way to pay off student loans and it will take some time to pay them all off no matter what approach you take. There are a few things to keep in mind that may help you pay off those loans faster. The first thing to keep in mind that the loans you have probably compute interest daily and this means that the interest can start to add up fast. It also means that the longer you go without making a payment the more of that payment will go toward interest. It is usually better to split up your monthly payment into four small weekly payments. Just splitting the payment up you can take one to two years off the life of the loan. Granted this can depend on what your certain circumstances, but in most cases this will help lower your loans faster and you will have to pay less interest. The next thing to remember that usually the payment that the institution that services your loan calculates is the bare minimum and that it is better to try and pay more then the actual payment. This can be hard sometimes but every little cent adds up when paying of the loans. Another thing to do is read all of the documents regarding your loan. Sometimes the small details in those documents can save you some money and save you from getting into a tough situation. Just think once that loan is gone you will have an extra chunk of money each month to spend or invest.