Alan emails: “Is refinancing a vehicle ever a good idea? I have 48 months left and after inquiring what the interest rate was, I found out it is 14%!!! Never realized when I signed paperwork.”
That was some pricey fine print you overlooked, Alan! But, luckily, you made the discovery with ample time left to turn things around.
It’s a little known fact that you can, indeed, refinance your auto loan and it can be a wise move for some borrowers, like you, who have years left on their auto loan and are stuck with interest rates that far exceed the norm. The average interest rate is about 4% for a four-year loan on a new car, according to Bankrate.com.
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Still, Interestingly enough only 12% of consumers have refinanced their auto loan, according to recent survey from CarFinance.com. We often hear so much about refinancing a mortgage that we forget auto loans are available to undergo the same type of financial retooling.
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In my opinion, for you, refinancing is a no-brainer and you should definitely look into it to begin lowering your monthly payment and saving money – so long as you don’t extend the term by so much that you end up paying more in the long run. Start by contacting a local credit union, bank or a designated auto lender. (And by the way, anyone can join a credit union. Just hop onto FindaCreditUnion.com).
One thing to note: Your existing lender may charge you a pre-payment penalty. This is something you may need to factor into the overall refinancing costs to determine if the move is financially smart.
Additionally, experts from Edmunds.com strongly recommend shopping around for the best deal and a few good places to compare rates, in addition to Bankrate.com is Capital One Auto Finance, ELoan, LendingTree.com and Up2Drive.com.
Once you find a reputable lender, getting approved is generally a quick and simple process.
Send us your money questions to YFmoneymailbag@yahoo.com