Lower Car Payments with Auto Refinance

Refinancing your auto loan can SAVE thousands of dollars.

Auto refinance is one of the most overlooked ways to save money.
Unlike a mortgage refinance, car refinance is much simpler, easy to apply, and faster to complete. There are many auto refinancing benefits including lower payments, lower rate, removing someone from the lien, and skipping 1st month's payment. As you’ll see from the example below, refinancing your automobile can save you up to thousands of dollars on your current auto loan. 

Example:
Let’s assume you purchased a new vehicle in 2007 for $20,000 in a 60 month term, with a 17.25% interest rate. 

Now let’s assume that you have maintained a terrific payment record, and for the first year, all payments have been made on time.  Your principal amount has been reduced to $17,241 (yes, even though you’ve made $6,000 payments over the year, your principal balance is reduced just under $3,000). 

Below are three scenarios given a new interest rate, assuming you keep the remaining four years on your loan:

If you were able to reduce your interest rate by 5% (many refinance lenders claim this is their average savings), you could save over $40 per month simply by refinancing your existing auto loan!

What if you would like to save even more on your current monthly payments?  One option is to extend the remaining term on your auto loan.  Let’s consider the same scenario from above, except you choose a 5 year (60 month) loan:

Notice how the monthly savings more than double by extending the term of your loan by one year.  Of course, choosing to extend the term of your loan is a trade off, and you’ll have to make the decision that is best for your current financial state. 

Extending the term of your loan could result in the payment of more interest dollars over the life of a loan, even with a reduced interest rate!  In addition, it adds another year of depreciation to your asset. 

Ready to learn more?  Continue to our next page:   Auto Refinance FAQs