Why Refinancing an Auto Loan is a Smart Option - OpenRoad Lending

Why Refinancing an Auto Loan is a Smart Option

While interest rates remain at historic lows, many consumers are not aware that you can refinance your auto loan in the same way you refinance your home mortgage. With the US economy struggling to get back on track, many consumers are pinching pennies and looking for new ways to lower their monthly expenses. What many consumers are discovering is that the best auto refinance lenders have streamlined the process to make refinancing an existing auto loan much easier than a mortgage refinance. Plus, with an auto refinance you can save hundreds, even thousands of dollars over the life of the loan which makes a significant reduction in your monthly payment.

Refinancing using the best auto refinance lenders can make a big difference. For each percent you lower your interest rate on a $20,000 loan financed for 60 months, you can save approximately $10 in your monthly payment. So let’s assume when you purchased your vehicle, the dealership marked the rate up that you would have normally received had you financed directly with the lender. In this case, let’s use 14%. After driving the car for a few months you find an online lender that offers refinance. You complete the online application in just a few minutes and get approved to refinance your existing auto loan at just 9.5%. In just a few minutes your payments would go from $465 per month down to $420. That’s a $45 per month saving or $2,719 over the life of the loan! The best auto refinance lenders will give you the options to refinance at a slightly longer term which can lower your payment even more.

If your goal is to lower the overall cost of the loan, refinance the balance that you owe on the car at a lower rate and then shorten the amount of months remaining to pay off the loan. With a lower rate you can keep your payment the same but pay off the loan sooner! 

The best auto refinance lenders will have tools on their website like auto loan calculators that you can use to check out rates and payments and estimate payments and loan costs. They will also have a secure, quick and easy application where you can apply for your refinance in just minutes. Regardless, interest rates won’t stay at these levels forever and you owe it to yourself to do the research and determine if refinancing your current auto is right for you.