For months you were saving and planning on buying that new car and you finally made the purchase. You researched and found the lowest interest rate auto loan available at the time, negotiated a reasonable price on the vehicle and purchased your car with confidence and glee! Since your original purchase though, you have noticed interest rates slipping everywhere and are now wondering if you can take advantage. By opting to refinancing your auto loan, you may be able to secure a lower interest rate loan option perfect for saving bundles of cash!
Calculating Refinanced Loans
Before taking any steps for refinancing your auto loan, it is important to use an auto loan calculator to conduct some basic calculations to determine whether or not you will actually save any money. As with many types of loans being refinanced, there will be fees associated with the process. Typically, lien holder fees are about $5 to $10 and state re-registration fees vary based on location.
When Can You Refinance?
Consumers can opt to try to refinance their auto loan at any time, however it is important to weigh all the factors in the decision-making process to ensure that your timing is solid. Ultimately, refinancing your auto loan should be based on your personal goals. If you have a low interest rate and affordable monthly payments, your car loan may be fine the way it is. However, if during the lifetime of your loan you have greatly increased your credit rating and interest rates are at least one full point below the level you previously committed to, refinancing your auto loan may be a viable option.
Like with any financial decision, jumping directly into the process of auto loan refinancing is not the most prudent decision. By taking the time to evaluate your personal finances, research your auto loan options and calculate the potential savings versus the costs, you will be able to make a well informed decision.