How to refinance your current auto loan
Most people do not know that you can actually refinance your current auto loan. And your auto loan company or bank probably does not want you to know that you can save a lot of money by having your current auto loan refinanced. Why would they, because they would lose money. They want you to pay top dollar all the way through your entire loan so they can make their greatest profit.
Most people know about and some actually have refinanced their home mortgage to get a better rate or to pay off higher interest credit cards and other debts. Refinancing your car or truck is very similar (the only difference is that there is no lawyer required at signing like there is with a home refinance). When refinancing your auto loan you take advantage of lower rates, an improved credit score and history, etc. and enjoy lower payments and a lower interest rate. Basically what you are doing is taking out a new auto loan on your car or truck from a different lender to pay off your current loan. This is perfectly legal and can save you a lot depending on the difference in rates.
When refinancing your car or truck, you can also extend the terms to even lower your payments more. In some cases people with a good amount of equity have elected to get the car refinanced to get cash back for needed items or emergency help. This is not recommended as your goal is to eventually get debt free. Remember, even though refinancing your current auto loan can help balance the family debt load and make things easier, a car or truck is a depreciating asset (unlike a house) and so therefore the goal should be to pay it off as quickly as possible.
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However, that does not mean refinancing is bad at all, on the contrary, refinancing can and usually does provide a significantly lower interest rate and better terms. The new lender wants your business. All lenders are in business to lend you money. This is why they will dangle attractive rates and terms to you. All you have to do is ask. Most current auto loans can be refinanced, especially taking into account that except for cut rate manufacturer financing deals most car dealers will try to hold 2-3 percentage points on your car loan if you get one through a dealer. This is the dealers profit for being a middleman and supplying the loan. Think you got a great deal from your local car dealer at 9.25% on that used car, check with your local banks and credit unions and you may find you qualify on that same vehicle for 7.05%.
It is essential for those with bad credit car loans to try and refinance. Car dealers and lenders for bad credit or marginal credit loans usually charge the state allowed maximum rate or darn close to it for very short terms which can result in very high payments. Some states have a maximum interest rate as high as 29% like North Carolina. Even if it is only 21% there is probably a bank or lending institution that will give you 15% or similar for refinancing through them.
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Another outlet that has recently come about is Prosper. Prosper is a website where people make and receive loans similar to the Ebay way of business. You could make a loan offer and see what they give you. If it is good enough (which it usually is just from watching the latest loan offers) you could take a Prosper loan and payoff your current high interest auto loan with it. Prosper loans work great for paying off high interest Pay Day loans (legalized loan sharking), title loans, high interest car loans, Buy Here Pay Here dealer owned car loans and debts, etc. The goal is to take advantage of low rates and better terms to allow you to pay off your loan early, save big on interest, and, bottom line save you money. The sad thing is that most people don’t know about refinancing their current auto loan and end up paying hundreds or even thousands too much for their car. Article provided by MDWholesale.com headlight cleaner, headlight restoration and headlight repair.