Is An Automobile Refinance Loan Right For You?

If you were not one of the lucky ones who were able to take advantage of the new car dealers no or low interest rates when they were available it may be time to start thinking about your automobile refinance options.

If your current car loan has an interest rate that is higher than the recent rate, you can save yourself some money in both the short and the long term by refinancing your car loan.

Many people, especially those with less than stellar credit ratings, find that they end up with a very high interest rate. Perhaps the dealership where they purchased the car told them it was their only option.

However, dealerships are not always the best place to secure a car loan. They add fees and cannot always give you the best rate. Therefore, if this is the case, it will be worth your while to check into other options now.

A few extra interest rate points can make a significant difference in the total amount of interest you pay over the life of your car loan. It will also raise your monthly payment. A difference of 1 percentage point on a $16,000 loan may only raise your monthly payment by $15 but over the life of the loan, you will pay $500 more in interest. Now raise that up a couple points more and you are talking thousands of dollars more in interest.

The automobile refinance process is not a complicated. You do have to meet certain qualifications. Most lenders will not refinance anything less than $7500 and the value of your car must be equal to and preferably greater than the value of the loan. In other words, you want equity in your car.

You can look up the value of your car online at the Kelly Blue Book or NADA sites. Compare it to the balance you owe on your current loan and see where you stand.

When it comes time to fill out the paperwork for an automobile refinance make sure you keep all the information the same. If the first loan was in your wife’s name, put the new one in your wife’s name.

This just speeds up the process and makes things run more smoothly. Also, the bank where you have your current loan will probably not be interested in refinancing but there are many lenders who will.

Refinancing can be advantageous for a variety of reasons besides a lower interest rate. With the downturn of the economy, many people have found themselves without jobs or their hours have been significantly cut. They are struggling to make ends meet. Others have gotten in over their heads in credit card debt that it is making it difficult for them to meet all their monthly obligations.

Refinancing a car loan can free up as much as $100 a month that can then be used to pay down the high interest credit cards or for other bills that are pressing. This can be done by refinancing at a lower interest rate but it can also be done by extending the life of the loan.

Again, you have to have enough value in the car compared to what you owe to make this work and it will end up costing you more interest in the long run, but it may be the best financial move for you to make at this time.

When considering an automobile refinance take your time to consider all of your options. Pull your paperwork together, find out your payoff amount, interest rate, car value and then look around for the best possible interest rate you can find.