Auto Loan Refinancing

Could you benefit from auto loan refinancing?

Refinancing an expensive auto loan can save you hundreds, even thousands of dollars on your car. So it pays to check out how the process of auto loan refinancing works.

Basically, loan refinancing means you're obtaining a new loan with lower rates than the original. Your credit score and current rate and payments will be reevaluated to come up with a new finance plan. Comparison shopping is a must because different lenders will offer different rates. You'll need to negotiate with each lender to see which one will offer the best rate for your loan refinance.

Auto refinancing has become more popular due to the dramatic drop in interest rates. If you're considering refinancing, browse licensed online lenders and local credit unions for new quotes to see what rates are available to you. To see if refinancing is right for you, consider the following:

• Who should refinance? If you have an expensive auto loan, large monthly payments or expensive rates, you may want to consider refinancing. People with expensive loans from an auto dealership can save tons of money by switching to an independent loan company. Refinancing is also helpful for individuals who want to buy the car they are leasing.
• How much can you save? Refinancing will often save you a lot of money - especially if your current loan rates are extremely high. Lowering your interest rates and / or your monthly payments can save you a lot of money in the long run. The exact amount of money you could save will vary between individual cases. Most lenders will offer refinancing rates of about 6 to 7 percent APR (annual percentage rate). This is much lower than the rates provided by dealerships.
• Requirements? Be aware that not all car loans will qualify for refinancing. The best thing to do is to make some inquiries. Most lenders will require that you have a minimum of $7,500 left on your current loan, and there may be restrictions on the year of the car and its mileage. On top of this, refinancing might only be available to people with a certain credit score - but this will vary between lenders so it's important to comparison shop when looking to refinance.
• What are the risks? Refinancing your loan may not always be profitable. It's essential that you take into consideration all the fees and costs of working out a new loan, because these could outweigh your savings. Also be aware that a refinance may actually extend the length of your loan in order to decrease your monthly payments.

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