Credit Crunch: Refinancing A Car Loan

You always see these TV commercials where they clatter on about refinancing your home mortgage in order to save big bucks. But hey, what about refinancing auto loans? The reasons to refinance a car loan, are the same as those for a home- lower interest rates, and reduced payments. When interest rates drops, and the conditions are right, refinancing your auto loan can save a good chunk of cash. And in this crazy economy, we all can use a little more dough.
According to Ask Dr. Don, a good place to start shopping for refinancing rates in on Bankrate; a site that will give you an idea of which financial lender are competitive in your market. Bankrate even has an auto loan calculator to compare a new refinancing payment to your current payment.

When you’re going driving down the refinancing parkway, first, use common sense and evaluate your situation. If you bought your car on a promotional loan with 0 or 1.9 percent, obviously you’d have to be dumber than a greasy engine to want to refinance for 7 percent or higher. But if the reverse is true, let the refinancing adventure begin!

Another thing to remember, refinancing might not lower your payment but you could find yourself in a situation of saving $500-$1000 on the loans interest rates. If your credit is piss- poor, refinancing can save you even more money if you are approved, since those who have bad credit might be paying car loan interest rates as high 20 percent or more. If that’s the case, and your credit improves (perhaps by a good job or bills paid on time), then it’s a fine-and-dandy time to look into refinancing options.

A few other tips to keep in mind when refinancing your car:

• Check local credit unions and banks: Finance arms at corporations like General Motors Acceptance Corp. and Ford Motor Credit do not offer refinancing. Bah!
• Know your terms: Make sure your existing car loan doesn’t have a large prepayment penalty. A great deal depends on the length of the loan term. Another thing to consider, there are also a couple of low fees that vary by lender and state, including the lien holder transfer (under $15), and state re-registration fees (under $80).
• Search Online: It’s just a mouse click away to compare financial institutions. LendingTree.com and E-Loan.com. are good places to start, while Capital One Auto Finance gives props to people with bad credit who are showing signs of improvement.
• Extending the term length: This is a good option for those not in a credit crunch, but would rather smaller monthly bills by extending the refinancing terms beyond the old loan’s date. If interest rates are low, this might be a good option.
  

So what are you waiting for? Look into it today and save some dough. Treat yourself to a nice hot fudge sundae when you do, and most importantly, good luck my friend on your quest for car refinancing!

Harmon Leon is the author of the new book, The American Dream: Walking in the Shoes of Carnies, Arms Dealers, Immigrant Dreamers, Pot Farmers, and Christian Believers!

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