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Financial Experts Present Three Loans that can be Difficult to Refinance

By Faye Mergel
Published: Sunday, January 20th, 2013

According to the financial experts, if you have purchased a new car with only limited or no down payment, or if you are riding a clunker, it might be difficult to refinance it. The rationale behind it is that you are in debt for more than what is the actual worth of the vehicle, or the total value of the car is such small that the lending company may not be willing to leverage on it if in any case you turn out to be a defaulter. Financial lenders, who provide car loans, typically consider the income and credit of the borrower, and the true value of the car as a security for the loan.

However, don’t think yourself to be out of luck. To refinance it, check with the three lenders, credit union, local bank or online lenders, thus, analyzing the options available. Mellow the rate of loan shopping down to a period of two weeks, because multiple inquiries can badly affect your credit score. Alternatively, you can also sell the vehicle and consider, may be a personal loan, to arrange for hard cash, recommends financial experts.

Home Loans:

Despite of cases of recovery in the home loan market, almost 10-14 million homeowners have their homes which value lesser than they actually owe. While there is not much refinancing options for these homeowners, the Home Affordable Refinance Program (HARP) was anticipated to refinance home loans at much lower rates and with smaller payments, but lacked the interests of the lending community. As stated by the financial experts, a better option of refinancing is to check whether the loan is entitled under HARP 2 regulations. If yes, apply for the same. Alternatively, you can sell your home and try to modify your loan, or whether bankruptcy can make the mortgage affordable.

Student Loans:

Refinancing student loans is tricky. For federal student education loans, there are options to consolidate all the loans together, benefiting from a fixed rate of the amount payable and repayment period of 30 years. Alternatively, Income-Based Repayment Program is a good choice for refinancing federal student loans of high repayment amounts.

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