An auto refinance loan can save you a lot of money in both the short term and the long term. One of the good things about auto loans is the fact that they’re pretty easy to get compared to other types of credit. The reason it’s typically easier to get a car loan is because when somebody fails to repay their loan, the lender can simply repossess the car. On a cash loan, there’s not the same collateral available to the lender and you’ll typically pay a much, much higher rate. Take a look at payday loans, for example, where annual rates can be as high as 1800%. With auto loans, interest rates are much lower, often in the single-digits depending on your credit and any special promotions.
When To Consider Auto Refinance?
Refinancing your loan can be favorable for you and your wallet, but if you don’t do it at the right time it’s not always the best idea. Here’s a look at a few times when you should consider an auto refinance.
- When your credit has improved since you first took out your auto loan, it’s probably time to refinance.
When you have good credit, it’s less expensive to borrow money, and you can likely take advantage of a lower interest rate by refinancing an auto loan that was taken out when you had worse credit.
- If interest rates are lower than when you first took out your auto loan, it’s time to consider auto refinance.
If interest rates have dropped at least a couple of points since you first financed your vehicle, it can make a lot of sense to refinance and take advantage of these lower rates. A lower interest rate can save you a ton of money. Sometimes when you refinance, they will want you to extend the length of your loan in return for a lower rate, which can be worthwhile – especially if there’s a clause which allows you to pay off the loan sooner. You can use the money you’re saving to own your vehicle outright as quickly as possible.
Used Car Loan Basics
Whether you get your used car loan from the bank, from the dealership, or elsewhere – these loans typically have a little bit more leeway for two reasons. First of all, as we mentioned, because the lender will be able to use the vehicle as collateral. Another reason, however, is the fact that when you get a used car loan from a dealership, the dealership is already making a tidy profit on the car which they likely purchased as a trade-in for next to nothing from somebody who was eager to get a new vehicle.
Where To Refinance Your Auto Loans?
There are a few different places to refinance auto loans, here’s a look at some of them…
– Your Bank: You may be able to refinance your loan in a favorite way at your bank, it’s worth taking the time to talk to them but there might be a better option for you.
– Websites: You can get refinancing for your vehicle loans online at a site like RateGenius.com. These websites provide a simple and effective way to find out if you quality for refinancing, and can help you get the very best rates due to their low overhead.