Want to spend less? Paying less each month? Then you should refinance your old car loan. Swap your high-interest loan for one with a lower rate, especially if your credit has gotten better. You can also lower your payments by extending the length of your loan, which will help you keep more cash on hand.
High Rates Trading
When interest rates go down, it makes sense to refinance both a mortgage and an auto loan. When you decide whether or not to refinance, you should think about how long the car loan will be. If you only have a year left on your loan, refinancing won't save you money because you've already paid most of the interest.
Refinancing for a shorter term can also help you save money on interest. Even if your interest rate stays the same, cutting your loan term by two years can save you over a thousand dollars in interest. Again, to be sure you can save money, you need to look at how long is left on your original car loan.
Better Score, Better Rates
If your credit score has gone up since you first got your car loan, you may save money with better rates. Even if rates haven't gone down for most people, you may still be able to get better ones.
In addition to making regular payments on time, you can also improve your credit score by lowering your debt ratio. When none of your accounts are full, your score also goes up.
Less Payment, More Time
Refinancing isn't just a good idea when rates go down. You can lower your monthly payment if you roll over to a longer term. Just remember that you will pay more for your car loan in the long run. But if money is tight, this option can help you make sure you don't miss payments on your loan or other bills.
Research financing companies before agreeing to a refinancing deal. Compare their APRs, ask for free quotes, and read the fine print. Also, make sure there are no early payment fees with your original lender. The best car loans to refinance are the ones that save you money. If you take the time to look into financing options, you will find just such a deal.
