Refinance Saves You Money
A few years ago you found the car of your dreams and you got an auto loan to pay for it and life was good. But maybe that auto loan is not working that well for you anymore. Times change and so do auto loans. Interest rates my have decreased, or maybe you are just paying to darn much in monthly payments. Maybe you still have a lot of years left on your loan and you feel hopeless. Don't despair! You can still change the terms of your loan and start saving money!
When you get your auto loan refinanced you are basically taking out another loan. The lending company you choose to refinance with agrees to pay off the rest of your current loan, and then you pay them off with a different payment plan that helps you save money. This usually includes a lower interest rate and lower monthly payment but an increase in the amount of time it takes to pay off the loan. So even though you will end up paying more in the long run, the short term savings of getting your auto loan refinanced can be much more beneficial to you.
Another reason to refinance is the fact that your credit score will change over time. If you took out an original auto loan with bad credit your interest rate would be pretty high. But people's credit scores can improve over the years and if your's has improved to the point where your current interest rate is unfair compared to your credit score, then it is time to refinance your auto loan. When you refinance your auto loan your interest rate will be based on your current credit score, which could help you save a lot of money.
Auto Refiance In The Real World
A real world auto refinance example:
You bought a beautiful new car that cost $25,000, you got a 4 year (48 month) loan at a 15% APR. Your monthly payment would be $695.77. You decide that your monthly payment is a little to high for your liking so you decide to refinance after two years. Let's say you have paid off $10,000 on your car in those two years, the rest of the payments have been interest. If you refinanced your auto loan at a reasonable 8% APR and extended your loan for an extra year, you would only be paying $470.04 a month. That is a savings of $225.72!
The length of your refinance can vary, but the longer your refinance loan runs past your current auto loan the more money you will save per month. An auto refinance loan is a great way to save yourself some money if you don't mind extending the length of your loan.
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