If refinancing your car is something you’ve been considering, but you also have another auto loan, you should know that you can actually combine two auto loans. So instead of conducting a refinance on two separate vehicles, you can consolidate them into one monthly payment that will usually allow you to lower your interest rate.
How to Combine Two Auto Loans
The easiest way to combine two auto loans is to contact a bank that offers this service. There are several out there that will take both of your car payments and make them one; however, this is usually only possible when one is smaller than the other. Of course, the odds of this being the case are very high. Usually when this is done, you’ll have one new interest rate that results in a lower payment. However, when doing this type of consolidation, make sure that your new loan term does not stretch out passed the length of your longest loan term period – you don’t want to be paying off your balances forever.
Pay Off Other Bills Too
Some banks are not just allowing you to combine two auto loans when refinancing your car, they are also allowing you to add other bills to the equation. For instance, say you have only one auto loan that you want to refinance; however, you have two credit card bills, you can take care of those two. How it works is, the bank will allow you to refinance for an amount larger than your vehicle is worth, yet keep a low monthly payment. Then after your loan is paid off, the amount leftover can be applied to some other bills. This will help you keep up with your credit card rates if you need it.
However, keep in mind when doing this that the amount of time it takes to pay off your refinanced vehicle may outlive any other debt payments you may have, so it may not be a good choice if you want to pay off an auto loan early. So if you’re not sure that you’ll need this type of assistance, you may want to shy away from it.
It’s good to know that you can combine two auto loans when refinancing your car. It can alleviate the stress of keeping up with multiple bill payments while making them more affordable.