So you’ve gotten your new car home from the dealership. You’re quite pleased with yourself because you’ve negotiated low monthly payments, and even though the taxes and warranty set you back, you feel you’ve made a sweet deal on a new car. Then your friend asks, “how much are you paying in interest on the loan?” As you compare notes, you realize that the dealer financing you applied for that they said was the “best rate” available, wasn’t such a sweet deal after all. Buyer’s remorse sets in as you realize that over the term of your loan, the extra interest you are paying could cost you a bundle!
The good news is you can apply for refinancing on your auto loan, the same way you can apply for refinancing on a home loan. Many consumers are surprised to find that this is an option for them, but the fact is you can save money by paying a lower interest rate on your loan by refinancing your car. When should you consider refinancing an auto loan? In the situation above, you could start looking into your options. There are plenty of other reasons why you might want to refinance an auto loan, as well.
One reason why people refinance auto loans is if they had bad credit when they bought the car in the first place. Let’s say your credit rating was below average when you bought the car and, as a result, you got stuck with a bad credit auto loan. However, after six or twelve months of on-time payments your credit rating is looking better, and maybe you’ve taken steps to clean up your credit. If your credit score has improved since you got the car, you could refinance at a lower rate.
Many people find that refinancing a car loan saves them money and speeds up the time it takes to pay off the loan completely. Check with your bank or credit union, and compare rates online, to see if refinancing your auto loan is a good choice for you.