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Are your interest rates on your car loan too high? If this is the case, refinancing your car loan may be a good idea. Reducing your interest rate by a point or two can save you hundreds of dollars in interest over the entire life of your loan. Your monthly payments will also be lowered as a result of refinancing.

What does it mean to refinance a car loan?
Refinancing means that you pay off your existing car loan with a new loan. Your new loan is generated at a lower interest rate, with an increased term.

How much does it cost to refinance?
Fees associated with refinancing a car loan are minimal. Usually only title transfer costs and processing fees.

When is refinancing useful?
Many times, people with bad credit, no credit or those that have experienced bankruptcy will receive high interest rates when applying for car loans. Once stability is established by means of a positive payment history, you can qualify for a lower auto loan interest rate. Typically, one year of timely payments should be exhibited before refinancing should even be considered.

Refinancing is also a good option for individuals that are having a hard time paying their current car loan. Why? As mentioned, by refinancing  you can reduce your monthly payments by stretching out the length of your loan. However, if you are in debt, you are not going to obtain a lower interest when you refinance. Therefore, you will wind up paying more money in interest over the length of the loan. However, refinancing will make sense if it will help you eliminate falling behind on your bills.

When does refinancing not make sense?
Refinancing your car loan is not always the best option. For example, if you have a new car loan, refinancing will turn your loan into a used loan.

Also, if your car is in very poor condition, refinancing makes no sense. Why? The interest rate of a depreciated car is going to be higher than a car that is in good condition. So, if your car's condition has declined since you first took out your loan, you will receive higher interest rates when you refinance.

Contact us!
If you have any questions about refinancing, please contact us!



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