A refinance car loan can save you
money on your current lease or loan obligation by reducing your current
loan rate. A refinance car loan can occur in several ways, and is usually
restructured depending on your personal data information.
A refinance car loan may be for you if you; want to take advantage of
lower interest rates and lower monthly loan payments; are locked into an
auto lease and want to convert it to a standard loan; want to cash in on
the equity of your current vehicle; want to improve your credit rating; or
are looking to purchase a new home and want to qualify for a better
A refinance car loan can occur by replacing your current loan with a lower
interest rate loan over the same period of time remaining on your loan.
You can create a new loan term which will help you keep your payments down
by extending the term on your loan. Or you can reduce the length of your
loan by reducing the total interest expense.
To obtain a refinance car loan you first need to supply your lender with
your credit information. They will then call you back with your approval
and will go over the rates and terms. Its a simple way to improve your
debt-to-income ratio, and provide you with that much needed rate drop.
It sounds like a great deal: Buy a
car and finance it for five, six, or even seven years. Payments are
smaller. You can buy more car. And automakers and banks make it easy to
So what’s the hitch? Long-term debt.
By not paying off their loans fast enough, car owners run two financial
risks down the road. They could end up still owing money on their old car
when they go to buy a new one. Worse, they might owe more on their vehicle
than it is worth.
Such problems have become more pronounced as the price of new cars has
risen – to more than $25,000 on average last year – and auto companies
have eased credit terms to keep cars moving off the lot.
“It’s a vicious cycle,” says Peter Humleker, a former auto dealer and now
consumer advocate and author of the e-book “Car Buying Scams.” “Consumers
just keep digging themselves a bigger, deeper hole.”
The only way out is to buy a less expensive car or to hang onto the old
one until it’s paid off, says Rob Gentile, head of the car-buying service
at Consumer Reports.