Tips on how to refinance your car

Posted by at 20 March 2020, at 07 : 46 AM

Tips on how to refinance your car

There are a lot of reasons why a person would want to refinance their auto loan. In general, auto loans have been stretching to longer and longer repayment periods in recent years.

While a five-year loan has been traditionally the standard for financing a car purchase, that number has stretched to six years — even seven — in recent years.

Having a longer term loan means you can have a more expensive car for a smaller monthly payment.

It’s really a matter of what best meets your interests. For example, if you wanted to buy a Camaro with all the bells and whistles and didn’t want to have a massive monthly payment, then a six-year loan might be what you need.

If you don’t have a long commute, then a longer loan isn’t as much of an issue. However, if you have a longer commute, putting 30,000+ miles per year on your car means you could have as much as 180,000 miles on your vehicle before you are in a position to buy a new one.

Of course, you may want to have the car now for a low payment and then pay it off sooner when your situation changes and you’re able to dedicate more resources to paying off the loan.

That’s why refinancing your car loan is a vital tool in any car owner’s toolbox. By refinancing, you can establish new terms that change the length of your loan to fit your needs, whatever they may be.

And with interest rates hitting historic lows, refinancing a car has never been easier. You can even get refinancing online.

Be unique

If you have taken care of your credit score, there’s going to be a lot of different ways to approach your auto loan — you’ll be able to pick what best protects your interests, allowing you to plan for the additional costs of vehicle upkeep and planning when to purchase your next vehicle.

But even if your credit score isn’t quite where you want it to be, you are still not without options. With interest rates as low as they are, it’s less of a gamble for lenders and your rate may not be unreasonable despite your score.

Plan ahead

The most important thing to keep in mind that, while refinancing can be a way to reduce the amount of your auto loan, you may still be able to achieve that goal without tacking on years until you pay off the vehicle.

The lower interest rates alone can reduce the amount you are paying. In fact, if the amount you are paying now is acceptable, but the amount of time you have left on the loan is not, it’s worth modeling to see how much your monthly payment would be when you factor in the shorter loan length with the reduced interest rate. You may find yourself paying the same amount of money and shaving significant time off the repayment process.

Regardless of why you’d want to refinance, the interest rates are so good right now that if you have any kind of an auto loan, it’s worthwhile to explore your options.

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