Auto Refinancing Pros & Cons

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The pro of auto refinancing is that a lower rate will be paid on the loan, but the main con is that the car is getting older and less valuable. Refinancing may also lead to paying more interest on the loan. Avoid refinancing a car loan unless the interest rates are at least 2 percent different with tips from a registered financial consultant in this free video on auto loans.

Part of the Video Series: Investing & Money Management
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Video Transcript

This is financial adviser Patrick Munro talking about auto refinancing pros and cons. Well when the interest rate starts to lower itself because of the universal trends that are out there and you have a car that you bought some 24 months ago with a higher interest rate, there's a good opportunity for you to go to a financial institution and refinance your car down to the new lower rate of interest. If you choose to do that, make sure that you're working with a financial institution that will take into account the fact that your car is a certain amount older and that they will not take your car loan and push it out a further amount of time because that would mean you would have to pay more interest on the note and the car is getting much, much older. Normally for you to refi a car loan, there should be at least a 2% difference between your existing rate and the prevailing rate that's out there to make it worthwhile and noticeably lower your monthly payment. Of course in modern times nowadays, there's a lot of shortness of sales out there with the various automakers and many people have 0% financing. If you do, consider yourself lucky but if you have a used car, always remember that it is possible to refi your automobile but be aware of the pros and the cons. This is Patrick Munro, financial adviser, talking about auto refi pros and cones.

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