When there is a drop in interest rates of loans on new and used cars, it is a smart decision to opt for refinancing your existing liability. It is believed that by refinancing your loan, you can end up saving thousands of dollars.
Refinancing Leads to a Considerably Lowered Payment
As an example, take a situation, where you have purchased a new car sometimes back. At that time, you had issues with your credit score. To get your hands on your favorite car, you had to opt for a loan, which spread over a considerable length of time and at a high rate of interest. Now, after a year or so, your credit score has improved and you are eligible for a lower interest rate. By refinancing your existing loan at a lower interest rate for the remaining portion, you can end up saving a considerable amount of money over the remaining life of your loan. In many of the cases involving used cars, car owners have seen their monthly payments getting reduced to half, once they have opted for refinancing their existing loan.
Is there a Downside?
Now, the question, which many ask is that “Does refinancing auto loans come with a downside?” No, they do not. This is because unlike home loans or mortgages, most auto loans do not require prepayment fees or penalties being paid to the initial lender for closing the existing loan. Again, the loan application process, whether for refinancing new or used cars, is quite simple. You only need to fill up an application form, which is going to take a very small amount of your time.
What Do You Need to Do?
If you are thinking about refinancing your auto loan, the first thing, which you need to do, is to locate your purchase contract and the loan document. You should check the loan period, remaining principal and existing interest rate. If you have an online account with the lender, getting these details will not be that difficult.
Shop for the Best Deals
Today, you will find a lot of lenders offering refinancing for new and used cars. You should start first by checking out, if your existing lender is offering such scheme or not. You should compare the rates on offer from different lenders using online loan calculators. These loan calculators only require the name of your state and your closest cities. What they do is show you a list of lenders and the rates, which they are offering to you, in your nearby area. You should make it a point to review the loan term, as different tenures come with different rates. Again, you should also be aware of the fact that lenders might run credit checks while offering you refinancing deals, especially when it comes to used cars. The credit check might give you a result slightly different from what you get in the calculator.
Do remember that auto rates keep falling down from time to time. Make sure that you are not throwing away money unnecessarily in the form of interests, especially in case of loans on used cars. Visit usedcarslic.com and find out how much can be saved by bagging in a loan with a lowered interest rate.