Just like with home refinancing, there is auto loan refinancing but not many people have thought about this option to save money. If you are paying high interest on your auto loan you should consider the option of refinancing, you may be surprised how much you can save and lower your payment all at the same time.
Whether you have good credit, no credit or bad credit, you can get auto loan refinancing that is right for your budget. There are many lenders who are willing to offer attractive interest rates but you will first need to obtain a copy of your credit reports and scores before you go shopping around for the best deal.
Depending on your credit score, your interest will vary accordingly, but it will be lower than what you are already paying. The auto dealer may have seemed to offer you the best deal based on your credit at say 21% or 29% interest, but you will end up paying more for the vehicle than it is worth at that rate.
Often refinancing can lower your interest from 0% to about 7% and lower your payment as well if you have a good credit score. The savings you will realize when you do this will allow you to pay off the car sooner or pay off some of your higher interest credit cards along with it.
Auto loan refinancing is becoming quite popular these days due to the interest rates dropping. More and more people are realizing that they can save a considerable amount of money and are choosing this route. But you must refinance within the first year of your car loan since this is the time period that the most interest will be tacked on to your monthly payment.
Also you may not be able to refinance with the original lender and will need to seek a different lender who offers a better rate. If you refinance within the first year, you will avoid paying the higher interest. But you need to make sure with your original loan that you make your payments on time to establish good credit.
Pulling your credit reports is easy as there are many websites these days that offer your three credit bureau reports along with scores. Obtaining your own credit report will not affect your credit score and it will allow you to see where you stand before you refinance. This way you will be better able to negotiate the best deal for you.
When shopping for lenders choose one that offers the best rate and compare the different lenders that you inquire about to see which one is actually the best. Either way, you will still save money even if you save only 1% in interest it will be lower than your initial interest rate. Auto loan refinancing can also be done if you have bad credit as well and will still end up saving you more in the long run as well as helping you to establish better credit.