What is the meaning of refinancing your car?
By refinancing a car it means to replace the existing loan on your vehicle with a new loan that has more beneficial terms based on your financial situation. If your personal financial situation has improved and your credit score has gone up you might be able to refinance your auto loan and lower your interest rate to get lower monthly payments. This may also lower the total amount paid for the car in the long run. Credit Unions offer some great rates to their members but you don’t have to be a member to refinance.
How you save money by refinancing a car loan?
You might want to pay less each month or lower the total paid for your vehicle, a simple way to do this is to lower your interest rates with a new refinanced car loan. Lowering the interest rate for the same number of years on your loan will decrease the total paid over the life of the loan and you will pay less. Better interest rates might be available for several different reasons:
- Overall lower interest rates due to the economy
- Your credit score has improved since you took out the original loan
- You make a little more money and the changes your debt to income ratio
If it’s a struggle each month to pay your car loan amount or you could just use some extra money you might want to simply change the terms of your loan. You could find some relief by extending your loan out for several more months or years and that would lower you payment.
Be cautious when evaluating the total amount you will pay for the vehicle. If you extend out the loan to lower your payments and keep the same interest rate, it will accrue more interest and you will pay more for the vehicle over the life of the auto loan.
Many services use Credit Unions to fund refinanced car loans for people everyday, they offer free pre-approvals to refinance your existing auto loan. The rates are right around 3% (12/14/20) for the best credit offers but if your situation has changed or you just want to find out if you could save some money then take a look at what your rate is and see if you could save.
A car refinance might not be the best decision for you right now. But, if the interest rate you are able to get is lower, auto loan refinancing could save you money right away.
Apply 24/7 at Open Road Lending. They compare rates from several different Credit Unions to find you the best possible offer.