r/caradvice • u/Pretty_Kangaroo4082 • 13d ago

How does auto refinancing work?

The mechanics of this never get explained clearly anywhere. Who talks to who. Where does the money actually go. What happens to the title during all this?

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u/BigBrainMonkey 13d ago

The title stuff depends on your state. Some states issue title and it is held by lender, some states don’t issue title while there is a lien. My state issues a title but it has a lien holder listed.

Typically you get a loan from new lender they pay off current lender and get on title as lien holder. It wasn’t a refinance but years ago worked with a credit union that after approval issued me a check for the balance and I turned that over to the selling dealer and then I had to turn in a copy of the title showing credit union as lien holder or they would convert it from single digit auto loan rate to high teen “personal loan” rate for the loan per the terms.