Your fixed monthly expenses may be one area to review if you want to save some additional cash. One fixed expense that could be reduced through a refinance is your auto loan. Depending on the terms of your loan, you may get a better deal the second time around. However, everyone’s situation is different and a vehicle refinance may not always be the right decision for everyone.
Here are 4 signs it may be the right time for a vehicle loan refinance:
Your Car Note is Too High
If you can no longer afford your monthly car note because of a change in your financial situation, you may consider a refinance that will extend the term of your loan but give you smaller monthly payments. Depending on the terms of the new loan, you can save a quite a bit of money, keep your car, and have more time to complete the loan.
You Want to Save on Interest
If you borrowed on five year terms during the initial loan, you may want to consider a refinance to a shorter term. You’ll pay more money on your monthly note but at the same time can save hundreds of dollars in interest charges for an entire year.
Interest Rates Are Lower Now
You can save thousands by refinancing a old loan to one with a lowered interest rate. Perhaps when you initially made the loan your interest rate was high but you’ve been watching the current rates go lower and you know your credit score is good. By refinancing the remaining balance left on the vehicle, you’ll have a smaller payment and save thousands on the total price of your vehicle.
You Need Equity Cash
If you are in need of some cash for debt consolidation or an emergency situation, you might consider refinancing the loan for the equity. This will work if you are nearly done paying the loan and if you still have a good credit standing.
Remember that in order to get the best interest rate and terms for an auto refinance, your credit must be in good standing. Refinancing your vehicle should be done for the betterment of your financial situation and not to your detriment. Be sure you can afford the new loan terms and always shop and compare terms from other lenders before making a decision.