Auto Loan Refinance refers to the refinancing service offered by a lending company. In auto loan refinance, the refinancing company will pay off your current balance and you will in turn pay the refinancing company the remaining balance but at a much lower monthly payments.
Auto Loan Refinance
Depending on the interest rates you are required to pay in the previous auto loan, auto loan refinance could dramatically lower your interest rate and save you up to thousands of dollars on your loan interest.
A good example of auto loan refinance situation would be if you purchased a $20,000 car payable in 60 months at an interest rate of 12.5%. And after several months of payment, your remaining balance is now 36 months which requires you to pay $449.96.
Total interest payments for 60 months would reach $6,997.53. Given the fact that you approach an auto loan refinance company which charges you 9% for the remaining 36 months. Your monthly payment would now be reduced to only $318 per month and you end up saving more than $2,000 in interest.
In order to avoid paying a higher interest rate in the future you should spend more time scouting for auto loan companies that offer the best financing deals.
Another is not to avail of financing through a car dealer as the interest rates they charged could be higher. Or, you could have a bad credit record and you got penalized with the higher interest rate.
Avoid these situations as much as possible so you will not unnecessarily incur higher interest rates. Some people are put off by the idea of auto loan refinance because they thought it requires a large amount of processing and paper works.
But in order to apply for auto loan refinance all it takes actually is just a few minutes of your time surfing the net and filling out the application form. Auto loan refinance is quite a simple and straightforward process.
As the Federal Interest Rate drops, auto loan rates always follow. So watch out for this tell-tale sign. But before you avail of auto loan refinance, find out if your current auto loan will charge a penalty for early payment.
It is necessary to inquire about hidden charges before you avail of auto loan refinance. Auto loan refinance often charges you a little transfer fee so you can replace the name of your old lender with the new one for the car’s title.