Refinancing Vehicle Loans

There are many possible reasons why you are currently paying too much on your current car loan. When you originally purchased your car perhaps you did not shop around for the best financing deals, or you took out your Vehicle loan through a car dealer at a higher interest rate. If your credit was not in as good shape as it is now you would have been penalized with a higher interest rate.

How Refinancing a Vehicle Loan Works

Refinancing an existing vehicle loan is quite simple and straight forward. Once your refinancing car loan application is approved, your current car loan will be paid off by the new auto finance company. You will then start making car payments at a lower interest rate than you were previously paying. Depending on how much your new interest rate is, you could quite easily save hundreds, even thousands of dollars over the course of the loan.

For example, you originally financed a new car for $20,000 at an interest rate of 12.5% for 60 months. If you have 36 months remaining on the loan, your current monthly payment would be $449.96, and the total interest paid out over 60 months would be $6,997.53. Now, if you refinanced at 9% for the remaining 36 months your monthly payment would drop down to $318.00 per month and you would save over $2,000 in interest.

Why Refinance a Vehicle Loan

If you’re paying 11.5% on your vehicle loan it doesn’t mean that there isn’t a better deal to be had. Most car loans can be refinanced and you may well be surprised at your savings.

Before you try to refinance you should first check to see if your current auto loan does has a penalty for early pay off. When shopping for a new car loan, ask about hidden fees or processing charges before you apply. You will be required to pay a title transfer fee because during refinancing you will replace the name of your new lender for your old one on your vehicles title.