| Oct 11, 2011
Often we get ourselves in over our
heads whenever we purchase an automobile. Many times we struggle to make those
large payments each month. The great news is, for those who have a good payment
background with your finances, you could be capable of lower car payments by
refinancing. By refinancing a car loan, in most cases you are able to lower
your interest rate and even shorten the term.
There are some points to take into
consideration before deciding to refinance. A refinance car loan
is a brand new
loan, paying off your existing lender and starting fresh with a new one.
Sometimes your existing lender will offer you a chance to refinance with them
but most of the time you will find more attractive terms by refinancing with
another lender. If you're only heading into a
refinance hoping to save a few of dollars a month, it might not be worthwhile.
However, if you are like most and your credit has improved since originally
getting your car loan, you will more than likely get a better interest rate and
lower your payments significantly.
It is easy to refinance in most
situations, providing you have a good payment history on your existing current
loan. One other factor that may determine whether or not you will qualify is
the loan to value or LTV or the vehicle you are trying to refinance. Most
lenders will not finance a lot of negative equity (the amount you owe over the
actual value of the vehicle). You will need to find out what the lenders
guidelines around LTV are before applying. You might also check what the
mileage limitations are in case your vehicle has high mileage. Most lenders
will refinance your vehicle up to 90,000 miles.
Refinancing to lower car payments
isn't for all of us. If you have plans on trading the car and not
keeping it very long after refinancing, then it may not be a good option for
you. However, if you plan on keeping the vehicle six months or more, then it is
the right move for you. You will be surprised on how much .25% or .50% can save
you in monthly payments. The average saving in interest alone is 1.35%. That
makes a huge difference in your monthly payments.
You can find out more information about how to
refinance a car loan
and other useful tools and tips online at OpenRoad Lending
. Do your research and find the best lender for you. With very little effort,
you will start the path savings sooner than you think.