Auto Refinance is simple, when you refinance a car loan, you pay off your existing lender and get a new loan where you can take advantage of the best auto loan rates and a lower payment. The benefits to refinancing are well worth the effort it takes to complete one. A significant savings in interest by getting the best auto loan rates, lower monthly car payments, the ability to build equity faster and get your loan paid off early are just a few.
Be sure to do your research in order to find the right online lender to complete your refinance. In order to save interest with car refinancing, the first thing that you will have to do is find out exactly what the payoff amount for your vehicle is. This amount is usually available on the most recent statement or you can contact your current lender to see what you owe. Once you have that information in hand, it’s time to apply for the new loan. While the ability to save on interest with car refinancing is an attractive part of refinancing your auto loan, many consumers are also interested in paying the vehicle off as quickly as possible. Depending on your particular financial situation, you may want to consider paying the same amount every month that you are currently paying. With your interest rate lower but your payment unchanged, you can shave months, or possibly even a year, off your loan. This will mean that you will be able to get out of debt faster and it will be very beneficial for your credit rating.
When it comes to putting the money you save back in your pocket and making a budget stretch farther, refinancing your auto loan is a great choice. Most consumers are surprised at the amount of money they can actually save by refinancing. A recent study showed that consumers that refinance their existing car loans save on average $102 per month. If you assume the average remaining term on all car loans is around 42 months; that more than a $4,200 lifetime savings in interest payments. A savings of just 1% in your interest rate can make a significant difference in your monthly payments.
So why can you get a better interest rate now versus when you purchased the vehicle originally? It could be one of several factors. This most common is the dealership where you purchased your vehicle. The finance Department is where the dealer makes their largest profit of a car sale transaction. When you refinance with an online lender, not only can you get the best auto loan rates but you also “cut out the middle man” and avoid paying the dealership markup on your average car loan rates. Other factors could be your credit score or your payment history. Any of these can have a positive or negative impact on your ability to get the best auto loan rates when you refinance.