auto refinance
- Refinancing an auto loan can be beneficial, if done correctly,
particularly in difficult economical times. Ironically, a large
percentage of consumers don't even realize it's possible to refinance an
auto loan.
The process of refinancing an
auto loan is similar to refinancing a mortgage. The borrower seeks out a
loan with better terms or a lower interest rate and the new lender
becomes the official owner of the vehicle until the loan is paid in
full.
auto refinance
Refinancing an auto loan can be
desirable for a couple of big reasons. Even the slightest improvement in
a borrowers credit rating can result in the availability of a more
manageable interest rate. Another reason would be to extend the length
of the loan which generally makes for smaller overall payments.
Borrowers
should beware of lending institutions that promise cash out of the
refinance or terms that seem too good to be true. In most cases if it
seems too good to be true it probably is. Also it's important to not
stretch the length of the loan for too many years in the hopes of
dramatically lowering the monthly payment. The value of a newer vehicle
decreases rapidly within the first few years after initial purchase and
one could easily find themselves trapped upside down in a loan.
Interest
rates fluctuate enough that it is possible that six months to a year
after initial purchase the average rate is several points below that of
the borrower's current rate. If the borrower has a decent credit rating
and does their homework they may be able to secure a refinanced auto
loan that brings the interest rate down significantly.
