Car loan refinancing is one of the best-kept secrets about how to save money. But most people have never thought of refinancing a car loan as a way to make extra money. So, how does a programme to refinance a car loan work? The idea is not hard to understand. When you get a car loan refinance programme, you pay off your current car loan with a new loan from a different lender that has a lower APR. So, a car refinance is pretty much the same as a home refinance.
Refinancing your car loan is good for you because it can lower the amount you have to pay each month. Also, your interest rate goes down, which lets you pay off your car loan much more quickly.
In 2001 and 2002, a record number of homeowners refinanced. This shows that it is a good idea. Today, more and more car owners are learning that you can save a lot of money by refinancing your car loan.
Refinancing a car loan has become popular, especially now that interest rates are going down. It's like finding money in your clothes or in your bank account that you didn't know you had. When you refinance a car loan, you pay less each month, which lets you pay off the loan faster. Imagine how much you could save just on interest if you could pay off your loan in, say, 12 years instead of 15. You can pay off your credit card debt or pay off your car loan faster with the extra money you save.
Refinancing your car loan can help even if you have bad credit.
It is true that people with bad credit can refinance their car loans to get a lower APR. But because some dealers trick them into thinking that they have no choice but to stick with 21–25 percent APR, they don't even think of trying.
Let's say you borrowed $16,500 for 60 months to buy a new Honda Accord. Let's also say you don't have a perfect credit score or have never had credit before. Your dealer got you a car loan with an APR of 21% for 60 months. So, you start making payments on your car loan for a few months, but then you decide to refinance it with a different lender at 6% APR.
At 21 percent APR, your current monthly payment is about $446. At 6 percent APR, your new car loan refinance payment would be about $319. At 21 percent APR, the total interest on your current car loan is about $10,283, but you can save about $7,643 if you refinance your loan and pay only $2,639 in interest.
See how powerful it can be for you to refinance your car loan?
