If you own a car free and clear with no loan, or even have a small car loan balance remaining, many Americans wonder: “Can I refinance my car loan?” The quick answer is YES! The challenge, however, is that this is a non-traditional refinance loan market, so you have to be a good candidate with good credit and you have to find the right lender.
Typically, we recommend you start by trying to refinance an auto loan or car loan refinance by beginning with a more traditional refinance product: the mortgage refinance loan. You can refinance your mortgage (if you are a home owner with good credit, good debt to income and a decent loan to value ratio) and consolidate your auto / car loan into your new loan. The big benefits here are a lower interest rate, and interest that is tax deductible; which means the effective cost of this new loan is much lower than a new auto loan. You can apply with Bills.com pre-approved lenders or check out the information hub on mortgage refinance loans on the Bills.com refinance loan page.
When you first bought your car, you might not have found the best financing deal, or as happens with many Americans your auto loan was an afterthought and you probably didnt get the best interest rate or auto loan. You could have taken out your car financing through a car dealer at an interest rate that is possibly higher than lenders or financing sources. This could be one of the reasons why you are currently paying way too much for your current car loan. If your credit is excellent, or if you have significant equity in your car or in your home even, then now just might be the optimal time to look into refinancing.
Car loan refinancing can be easy. Once your car loan refinancing application has been approved, your current loan will be paid off by the new car loan and you will now have a new loan. Ideally, with a lower interest rate you will be making payments that are lower than you have been previously paying. You could be surprised at how much you can save with a refinance. Your savings could amount to hundreds, even thousands of dollars over the course of the loan, depending on how much your new interest rate is charged on your car loan refinancing deals.
Car loan refinancing may be a very promising way of saving you money but most people have not thought of refinancing their cars. You can say that car loan refinancing works in the same way as home refinance. In car loan refinancing, you pay off your current car loan with a refinancing car loan. This time the loan comes from a different lender with a lower annual percentage rate, making your monthly car loan payments much less with interest rates that have dropped, while allowing you to pay off the balance of your car loan in a shorter span of time. Car loan refinancing has become a very popular trend because of the dropping interest rates. Use the money you save through your car loan refinancing to pay off credit card debt or accelerate your car loan payoff.
This is exactly the reason why people with bad credit who are paying a high APR need to apply for a car loan refinancing with low APR. Most bad credit borrowers can indeed refinance to a lower APR but many dont think to try because they were “programmed” or duped by the dealer into thinking they are stuck at the higher APR they have imposed.
Its very important to have a car loan refinancing early, because with car loans, the interest is mostly paid in the earlier payments. The earlier your car loan refinancing is approved, the more money you save. In addition, beware that some auto loan contracts charge the interest as a “finance charge” which will be due regardless of whether the loan is paid off early. Read your contract carefully and make sure that you are able to pay off the loan early without having high finance charges.
Consider evaluating all of your car and auto loan refinancing options. You may be surprised by how much money you can save just by lowering your interest rate. Refinance your car loan today!