Because of Europe’s debt crisis, interest rates are back down to record lows and a new wave of mortgage refinancing is occurring. But what most people don’t realize is that those same low interest rates are available to refinance car loans. Refinancing your auto loan is an often overlooked way to slash your car payment dramatically. And the application process is a heck of a lot simpler for a car than for a home (it only takes about 10 minutes). And unlike home mortgages, car refi’s are based off the outstanding balance of your loan, not the value of the car, so no appraisals are required!
So when does it make sense to refinance your car loan?
You’re a good candidate for refinancing if interest rates have improved since the time you got your original loan. And since interest rates are currently at the lowest level for over 50 years, most everyone meets that criteria. It also makes sense to refinance if you have improved your credit and qualify for better rates. Lastly, it makes sense if you have a high interest loan because you financed directly through a dealership and didn’t realize you can shop around online for competitive offers.
Even a 1 or 2% reduction in APR from your current rate can save you hundreds of dollars with minimal effort. At the time of writing this, up2drive’s advertised refi rates are as low as 4.29% (depending on your credit and length of loan).
To see just how much you can save per month, use this simple refinance payment calculator.
How does it work?
First, contact your existing lender to find out the payoff amount for your existing loan. Then go to up2drive or myAutoloan and submit an online application. Once approved, they’ll send you a check to pay-off your existing loan.
Both these lenders offer refinancing without any fees or points so comparing to your current monthly payment amount is easy. If you refinance through your own bank or credit union, be sure to read the fine print and avoid any with fees. And if you have bad credit, don’t fret, myAutoloan works with high risk borrowers.
Refinancing can be a great way to save money and even allow you to pay off your car quicker. Consider taking advantage before interest rates go back up!
Photo by: votejoehiggins
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