In the world of loans and refinancing, we have probably all heard and maybe even at one time or another thought of refinancing a home loan. You see those advertised all of the time, especially recently with interest rates being at historic lows. What most people do not realize is that you can get a refinance car loan as well and the process is quite simple. The advantages for many of us are we can refinance our existing car loans and save considerably on the monthly payments. Even in some cases you can skip a car payment during the process.
Who Should Get a Refinance Car Loan?
If you have a car loan that is currently costing you more than you think it should, then you are the type of person that should look into refinancing your car loan. Just like refinancing a home, by refinancing your car loan you can save money every single month. Most of consumers paid too much for the financing when they purchased their vehicle from the dealer. By refinancing, you can eliminate in many cases that rate mark up that took place at the dealer and save considerably on your monthly payments.
As you know, interest rates have been dropping and are at historic lows so now is the best time to consider refinancing. First thing you should do is figure out what your current interest rate on your loan is. Then go find out what the current market rates are. If there is a good difference, you could possibly save some money by refinancing! Even if you cannot save drastically on your interest rate, many lenders will allow you to extend the term which also makes an impact on those payments.
What Kind of Savings Will You See?
This is a great question that will naturally vary depending on the individual car loan that is being refinanced. Naturally the more expensive the car loan the more you’re going to save.
With the economy the way it is, you may consider it well worth it to save an extra $25-50 a month on your car loan payment. In times like these it is a good idea to save where ever you can, and a lot of people are spending a lot on their car loans each month. We have seen car loan payments drop as much as $200 per month in some cases but the average reduction is around $65 per month. That does not sound like much but that adds up over the length of your contract. On a 60 month loan, that is a $3,900 savings!
Do some research, find an online lender that has refinance car loans and they will be able to help you figure out what you can save. Be aware that some online lenders charge a fee to refinance a loan. Know that OpenRoad Lending charges no application or loan fees for completing a refinance car loan.
As you can see, there are lots of reasons and situations where getting refinancing could be a really good idea. In the end you will need to do some calculations to find out if it makes financial sense for you. Perhaps you want to refinance to lower your payments as much as possible. If that is you, then getting a better rate and extending the terms is where you will get your maximum savings. If you want to refinance solely to save and build equity faster, you may want to consider a shorter term than you have remaining on your current loan. With a reduced interest rate, you can sometimes shorten the term and not be paying anymore than you do now but will have the car loan paid off much sooner.