Question: What does it mean to refinance your vehicle?

(Posted by: Libra :) on 2010-02-23 13:35:20)

My friend made a comment that she was going to refinance her vehicle and well i dont know what it means to do that and in what way does it help. Can anyone educate me on that?

Posted by: ITFC on 2010-02-27, 06:31:19

Your friend is actually referring to an arcane financial practice, rarely practiced these days, outside of remote jurisdictions. Refinancing a vehicle means to establish your vehicle as a trust, or limited partnership and then provide a loan of xxx dollars for purposes of funding the expenses and corporation charges for said vehicle. It is really a great idea, because it allows you to draw money from the vehicle. There are certain legal requirements, like you have to hold annual meetings, but these can be held in luxurious resorts, which is another great advantage of this approach. So I think your friend is on to something, something that I'm surprised more of us don't do. Good luck.

Posted by: My Take on It on 2010-02-23, 13:39:07

It means she is hoping to get a new loan on her vehicle to repay the old loan and get a better interest rate or lower payment. The thing is, refinancing a car is not as easy as it sounds. Cars lose value, and most times, people are *upside down* in their loan, meaning, they owe more than what the value of the car is....that is why it is hard to get refinanced. A lender does not want to give more than the value of something.