Just as millions of Americans refinance their homes to save serious dollars, you might be able to refinance your car and have similar effects. While some might refinance to stretch out their loan over a longer period and therefore reducing their car loan payments, others are refinancing to put money back into their pockets. Regardless of your reason, a refinance car loan may be the right choice for you.
It is not all about interest rate either. Sure you see 0% interest rates advertised all over the newspaper and television but does everyone qualify for such a great rate? How do you know a super interest rate from a bad one? The problem is that advertised rates are for those with prime credit report scores, typically those with a credit score over 750. The vast majority of people have less-than-perfect credit, so looking the very best rates and terms is hard. At the least, you’d have to apply to numerous institutions. That’s why car dealers most of the time add on two percentage points above what you may get through a financial institution directly. The finance office is one of the largest profit centers for a franchise car dealer.
If you’re wondering if refinancing is right for you, here are a few rules of the road.
Improved Credit Scores
If your credit has improved, chances are you might be able to secure a better rate just as most can with their mortgages. In fact you had a blemish on your credit report score but enough time has passed such that it won’t have the same negative impact. But don’t forget to do what you might to improve your score before applying for any refinancing; your score is a moving target that changes as you make positive changes.
If you financed your car at the dealer, you more than likely will be able to lower your rate. Remember that dealer financing isn’t always the best and, in just a few minutes, you can now evaluate your options. Most of the time, all you need to know is your current loan balance, your monthly payment, and your credit score or general range (excellent, very good, fair).
Watch the Term
It’s easy to refinance your loan and think you’re lowering your expenses just because your monthly auto payments are smaller. But that may be because you’ve extended your loan another five years. If you do refinance, be sure you look at apples to apples using the annual percentage interest rate. Ideally, you must only refinance the existing unpaid balance and not extend the loan over a longer period.
So, just as refinancing your home might be a wise financial move, so too could refinancing your car. Searching for and finding an online lender will most likely be your best solution for refinancing your car loan. There you can find a no obligation application and know your terms within minutes of approval. Go online to OpenRoad Lending for more information about car loans and refinancing. You can also find useful tools to help with your car refinance process.