Saving money in this economy is easier than ever before. Interest rates are low and you can decrease your monthly payments by refinancing your car. Car loan refinancing can help you get a better interest rate, change your term, give you added benefits, and all at low or no fees. Most car refinancing is only available if you move your loan to an entirely different lender. But the savings add up quickly. You can use the extra money to pay off other debt or make a long awaited purchase.
If you got your car loan at an interest rate that is embarrassing by today’s standards, car loan refinancing is the road for you. Even with poor credit, you can get a better rate simply because interest rates are lower today than they were last year, even for bad credit. A good rule of thumb is the 1% rule. If you can lock in a rate at least 1% lower than your current rate, go for it. One percent may not sound like a lot, but over the long haul, it can make thousands of dollars in difference.
There are stipulations you must fit into in order to qualify for car loan refinancing. Usually the original loan must be with a different lender than the one you are working with for refinance. Most lenders require a mileage less than 80,000. Some lenders will not refinance commercial vehicles, motorcycles, or business use cars. Refinance on your car is based on the amount you have left to pay, rather than the value of the car. Most lenders will not refinance unless you owe between $7,500 and $10,000. A refinance car loan may not be worth it if you own less than $7,500. Do a little math to find out if a refinance will really be worth it for you.
The process of car loan refinancing is similar to original car lending. Shop around for a refinance just as you should for a first loan. Find the best deal. You might look for better interest rates, low or no fees, and other benefits. Lenders might offer gap coverage, which is padding for your car insurance. Or they might offer mechanical coverage for when your vehicle breaks down. A refinance offers you all the best of the current lending world. Lower your monthly payments with a better loan on your car.