Auto Refinance Rates - Car dealerships count on you being so excited about your new car that you'll overlook the loan details, seizing the opportunity to finance your vehicle at a high interest rate.
Now that the novelty of your purchase has faded a bit and you have a few payments under your belt, the reality of the monthly expense has probably started to sink in. With the prime interest rate on the decline, it's a great time to refinance your auto loan.
As with all loans, auto loan refinance rates correlate conversely with your credit score. In other words, as your credit score increases, your auto loan refinance rates will decrease. If your credit score is excellent or very good, you'll likely be able to refinance for a lower rate than your original dealership loan, potentially saving hundreds or even thousands of dollars.
When researching auto loan refinance rates, shop around with at least 10-15 lenders to see who can offer the lowest rate. Also be sure to inquire about any additional fees associated with your refinance. (Tip: Avoid lenders with an upfront application fee and those who charge for an appraisal.)
General guidelines for vehicle refinancing include:
Vehicle must be 1998 or newer with less than 75,000 miles
Balance of original loan must be between $7,500 and $50,000
Vehicle may not be used for commercial or business purposes
Even if you already have a low APR car loan (unless it's 3% APR or less), refinancing at a lower rate could still result in substantial savings. To determine the effect that a lower auto loan refinance rate will have on your monthly payment, enter the information into an online refinance calculator.
After you've refinanced and lowered your payment, resist the urge to fritter away the savings. Instead, apply the money you've saved to pay down the principal and pay your car off even sooner.