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Posted on 04/20/2022

Should I Refinance My Car?

Refinancing your car loan will allow you to replace your old car loan with a new loan from a new lender. You can save a lot of money by switching to a better loan with a better rate or a lower payment. And the longer you wait, the more money you’ll waste on interest. In this article, we explain when refinancing should be done and the steps to take to get there.


 

Three quick things to know about refinancing:


 

IT IS NOT TOO LATE.

 

Many people get lousy loans from car dealerships: the interest rates are too high, or they charge insane prices for protection products. You can save money by refinancing to a loan with a lower interest rate or lowering your monthly payments. Refinancing can also give you the opportunity to cancel, replace, or add better products at lower prices.

 


PAY INTEREST FOR AS FEW MONTHS AS YOU CAN AFFORD.

 

As with any loan, low monthly payments are nice as long as they don’t last forever. The best from both worlds? A low interest rate and a shorter loan term. It can be tempting to extend the term of your loan when refinancing your monthly payment, but remember that longer terms usually mean higher interest rates, which means you owe more money over the life of the loan.

 


CONSIDER PROTECTIVE PRODUCTS – THEY ARE VALUABLE – IF THEY ARE PRICED RIGHT.

 

Your new lender may allow you to add protection products such as Vehicle Service Contracts (VSCs, aka Extended Guarantees) and GAP Waivers to your new loan. These can protect your car and your wallet from expensive surprises. Learn how protection products can help you work smarter.

 


CONSIDER REFINANCING YOUR CAR LOAN IF:

 

The dealer took you for a ride and you got the wrong loan from the dealership and you want to do better


 

Your credit rating has improved (congratulations!) and you qualify for better terms


 

You need to lower your monthly bills with a longer loan term


 

You want to skip a payment – Some lenders give you the option to skip a payment between your existing loan and your new loan, which can be a nice boost to your budget


 

Ultimately, you can only determine whether refinancing makes sense for you by comparing new loan offers with your existing loan and making sure that you are saving money. If you are interested in finding out how much you may save, it’s free and fast.


 


FinancialExaminer.com is an excellent resource to find the best ways to save money.

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