Overlooked Benefits Of Refinancing Car Loans
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Hearing about refinancing mortgages is common, but you may not
have thought about refinancing your car loan when interest rates
drop. Refinancing an auto loan can be a good idea for several
reasons, and it is easier than refinancing a mortgage.
Refinancing could save thousands of dollars over the life of
the loan, even if you received a decent rate. Anyone who didn’t
get a car loan below 3% APR should consider refinancing. More
than likely, however, your APR was much higher than that.
If you had a few dings on your credit report when you bought a
car, the lender may have quoted you 20% to 25% APR. Despite what
you might think, you aren’t stuck at this rate. Once you have
held the loan for about 6 months and paid on time, lenders are
more willing to take a chance on you. You can also change a few
things to raise your credit score in that period.
Let’s say you received a loan for $16,500 for 60 months at 21%
APR. If you refinance at 7% APR, your monthly payments will drop
from about $446 to $330. Those savings over the life of the loan
totals about $6,945. As you can see, refinancing is key.
Refinancing will not only save you money, but it can also be
the only way to help get you out of debt. If you are paying 25%
APR, there is no way you will ever be able to get out of debt
while making these payments. Since you pay most of the interest
early in the life of the loan, the earlier you refinance the
better, and the more money you will save
One of the differences between car loans and mortgages is that
lenders will not refinance car loans that they originally
loaned. You will have to find a different lender to refinance
your loan. You can find lenders at banks, credit unions, or even
online that will refinance an auto loan. Remember to shop around
for rates for refinancing to get the best deal. It usually only
takes 5 to 10 minutes to fill out an application, and there is
generally not any risk involved in applying for a refinance.
About The Author: Lauren Armstrong is an industry professional
and expert author at http://Smartloanstart.com. Shop for a
loan, compare rates, and get instant approval online with our
recommended lenders and services at
http://www.smartloanstart.com
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