Refinancing Your Car Loan Might Save You Money

Sep 13th, 2010 @ 10:48 AM by Debbie Dragon

With interest rates at rock bottom lows, many people are unaware that they may be able to refinance their auto loan and save money. While refinancing your car loan will not save you the kind of money you would save from refinancing your home, it certainly can be worth looking into. You should not expect your monthly payment to drop significantly however, your overall savings for the life of the loan can make it worthwhile.

To determine if you are eligible and if refinancing your car loan will be worth your while, you will first want to check the terms of your current loan. Determine what your current interest rate is, how much is left on your loan and if you have any early repayment penalties. You will then need to check the current value of your car. While each lender has their own criteria, most lenders will only refinance your auto loan if the value of your car is equal to or less than what is owed. Most lenders will also want your car to be five years old or less.

The next step will be to start shopping around for the best rates. Bank Rate (www.bankrate.com) has a comparison calculator and will help set you up with a lender. You may also want to check local lenders including your credit union. If you need a new car loan, apply on our site.

Unlike refinancing your home, refinancing your car is a fairly simple process. There is no need for an appraisal and you can usually be approved for the loan the same day you apply. The entire process of refinancing your car almost always takes less than a week. There is some paperwork and there are some fees that you will want to be aware of. There will be a fee to transfer the title of the car as well as a registration fee. These fees are usually minimal and fluctuate depending on where you live.

Another option that may be available if you are looking to save even more on your monthly auto payment is to extend the loan. If for example you have three years left on your car loan you may be able to extend the loan to a four of five year term. This could give you savings of $100 or more each month.