How Do You Combine Car Loans?

You may have the option to combine car loans by taking a new personal loan and using it to pay off your existing auto loans. Most people consider this option if the new loan will have a lower interest rate than the existing loans. In this way, you are combining and refinancing your loans in one step.

1. Shop for a New Loan

Start by contacting various banks and lenders to look for low interest rates and favorable loan terms. Get an idea for the loan market and if consolidated car loans are easily available to you.

2. Determine If You Will Save Money

Determine if you will save money on your existing loans over time compared to your new quotes. Factor in any fees and penalties for refinancing your existing loans. If your original loans are from dealers, you will likely have high fees for paying them off early.

3. Consider Your Credit Score

Your credit score will suffer if you opt to combine car loans. You are modifying a loan, which will always appear as a negative on your credit history. Consider this negative affect in the total cost of your renegotiation to determine if you are truly getting value from your consolidation.

 


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