How to Refinance a Car Loan And Save Money

Refinancing is one of the loan industry's not-so-well-kept secret. Unfortunately, there are still many people who are unaware of refinance, as well as the benefits that come from it.

When you refinance a car loan, you have the opportunity to both lower your interest rate and make your monthly payments more manageable. Usually the best time to refinance an auto loan is when your credit score has gone up or the market price for auto loans has gone down (or both). Read on to learn more about how to refinance a car loan and save money.

Difficulty: Moderately Easy

Instructions

1. Research to find out the current market price of auto loans. If the average interest rate of car loans is lower than the rate you are receiving on your current loan, you are in a good position to refinance. On the other hand, if the average rate is higher than your loan, you may have a bit more of a problem.

2. Check your credit score with Equifax, TransUnion and Experian. If your credit score has gone up since you got your auto loan, you are in a good position to get a lower interest rate. On the other hand, if your credit score has not changed or has gotten worse, or if you have bad credit, you probably will not be able to get a lower interest rate -- although you may be able to get lower monthly payments (at the cost of a higher rate). When you refinance a car loan, your lender will base their interest rate upon your credit score.

3. Shop around for the best interest rate. Do not simply go with a lender who will only lower your monthly payments, unless you are in the position where you are struggling to make your payments in full. A lower interest rate, even lowered by a few points, can save you hundreds or thousands of dollars every month. If your interest goes up or remains unchanged for the sake of a smaller monthly payment, not only will you be paying more in the long run, you will be paying your loan for a longer time.

4. If you decide to refinance a car loan, make sure you are choosing a reputable lender and have compared rate quotes. Also ensure that you fully understand the terms of your new car loan. Refinancing an car loan is a big financial responsibility, so you want to make sure you are prepared.

Tips & Warnings

• You cannot refinance your auto loan if your car is more than 5 years old or if the amount you owe is equal to or less than the value of the car.

[robertbrown303]

on 10/23/2009 Your step by step instructions are simply great !!! Thanks , actually i am looking for car loan refinancing , and your article helped me a lot., I would also mention that , that i have read similar articles on http://www.720auto.com/ site, i suggest you to try this also.