Ignition Financial and Automobile Refinancing

Most people are probably not aware that refinancing an automobile loan is a viable means of the restructuring of one’s finances. We are all familiar with the financing of a car loan initially which creates a reasonable monthly payment with the car held as collateral for the loan.


The process of refinancing an automobile consists of the loan being reconfigured from an original position, which may be very unsatisfactory in its interest rate and terms, into a more palatable loan situation befitting a person’s current rating.


Many car loans that are made at a dealership or a used car facility are not very advantageous to the buyer of the car. Most of us walk into a dealership, pick out a car that we like, arrange to finance and make payments on the car until it is paid off.


What most consumers are not aware of is what happens behind the scenes, as the financing that occurs usually does not favor the buyer. The car dealer will have someone backing him on the new financing deal, such as a bank, credit union, or an auto financing company.


Lenders are usually in a bidding contest to see who can create the most car loans, so the lending institutions come up with all kinds of incentives to entice dealers to work with them on the loans.


One of the more common ways to do this is to put into place an incentive that is called “Dealer Mark-up.” The way this works is for the lender to establish a “floor rate” with the dealer having the chance to mark up the actual rate from the floor rate. This can increase an extra 2% to 4% onto the interest rate of the loan. The dealer then gets paid the difference as profit at the time of the closing of automobile deal.


If an individual’s car loan is set up in the manner described, it is possible to re-work the loan so that a more favorable rate can be established. Ignition Financial has a streamlined process for the processing of an automobile refinance. A customer will be able to see just how much will be able to be saved before any commitments are made.


In most cases, an auto refinance helps the customer to divert money that was going for car payments to other bills, savings, taxes, or anything else that extra money could be applied to. When a customer sees how the process works, he will certainly say, “slash my payments,” and rightly so as the system works!