Refinance Car Loans

In some cases, your existing car loan may not offer you the best deal. For example, if you have a poor credit history, but have made all your current car loan repayments on time, your credit rating should have improved. As such, you are now in the position to obtain a loan with a lower interest rate. Refinance car loans are much like debt consolidation loans (see Managing Debt), in that a new loan is taken out to pay off the existing car loan debt. This new loan should have a lower interest rate, thereby reducing the overall cost your loan. If the term of the new loan is equal to that of the old one, monthly repayments will decrease because the interest charge will be lower. You may wish to take advantage of this. By making repayments equal to those of the old loan, you pay back a greater amount of the loan in a shorter period of time; more of your payment goes towards paying off the actual debt, rather than merely covering the interest charge. Interest is charged until you pay back the amount borrowed, so the quicker you repay the debt, the lower the overall cost of the loan. You may wish to ask your loan provider if a shorter loan term is possible.

Often, to qualify for a refinance car loan, the existing loan amount cannot be higher than the value of the car and the car must be less than five years old. You should compare a range of different refinancing deals from a variety of lenders however, as the terms and conditions do vary. Your existing lender will not offer a refinancing deal, so you should obtain a number of quotes from different lenders before making a final decision. Refinancing is easier than you may think and could dramatically cut the cost of your car loan; many lenders are willing to give you a decision within hours of receiving your application.