If you are wondering whether or not to refinance your auto loan, here are some pros to help you decide. Refinancing can produce a lower interest rate as well as a lower monthly payment. When you refinance your car loan, your existing loan is paid off and you are responsible for a new one with, hopefully, better terms. If you have a good credit score and have paid your debt on time, then refinancing could be right for you.
Some of the factor to consider before refinancing include:
- your current interest rate
- current payment
- overall health of your finances
- short-term and long-term benefits of refinancing
One great reason to get a new loan is that it can save a lot of money in the long run because you will be paying less interest. So, if interest rates have dropped since you got the current loan, or if your credit score increased significantly, you will probably get a much better rate. Extending the number of months in the pay-off duration can free room in your budget. If you borrow $22,000 to be paid off in four years, but refinance to five years, you can save $100 a month. The same loan, with 1% lower interest can save thousands. It is always a good idea to use the extra money to pay down debt or fund a retirement plan.
If you have equity in your car, you might be able to cash out. If the lender agrees that your car is valued above the loan balance, they can pay off the old loan and give you the extra cash. Refinancing while you still have equity in your vehicle (cars devalue over time) can be a great decision. So, if money is tight or you need cash, this is the way to go.
How do I Slash my Payments?
Many websites include checklists and information on refinancing. Ignition Financial has professionals who are experts at matching consumers with the perfect financing options. They will be able to determine what kind of auto loan you need, whether it is help buying a leased car, refinancing an existing loan or purchasing a company car.
In a tight economy, refinancing can cut monthly bills and free up cash in your budget.
Ignition Financial lenders offer competitive rates and flexible terms. Use the car loan calculator on the website to explore terms and down payment options that work for your budget.