One of the best kept secrets around for saving money is car loan refinance. However, most people never thought of car loan refinance as an effective way to earn extra cash. So how does a car loan refinance program exactly work? The idea is pretty simple. When you get a car loan refinance program, you pay off your current car loan with another car loan from a different lender that has a lower APR. So basically, refinance a car loan is the same as a home refinance.
Car loan refinance is good for you since refinancing auto loans can lessen your monthly car loan payments. Also, your interest rate drops, allowing you to pay off the balance of your car loan much faster. Today, many car owners are beginning to realize how you can save thousands through car loan refinance, too.
Car loan refinance has become a popular trend, especially with today’s dropping interest rates. It’s like stumbling upon a bankroll you didn’t know you had or finding cash in your clothes while doing laundry. With car loan refinance, you pay lesser monthly payments, allowing you to pay off your loan balance faster. Imagine how much you can save on interest alone if you could pay off your loan in say 12 years instead of 15. You can use the extra money you save to pay off credit card debt or accelerate your car loan payoff.
Car loan refinance can benefit even those with bad credit
Car buyers with bad credit can indeed obtain car loan refinance as a way for them to lower their APRs. But because some dealers dupe them into thinking that they have no choice but to stick with 21-25% APR, they don’t even think of trying.
Let’s say for instance that you borrowed $16,500 for 60 months on your new Honda Accord and let’s assume that you have a less than perfect credit rating or have had no previous credit. Your dealer got you approved at 21% APR for a 60-month car loan. So you start paying off your car loan for a few months but then you decide to get a car loan to refinance with another lender at 6% APR.
Your current monthly payment at 21% APR would be around $446 while your payment for the new car loan refinance at 6% APR would be about $319. The total interest on your current car loan would be around $10, 283 at 21% APR but you can save about $7,643 of that if you get a car loan to refinance with a total interest charge of only $2,639.