When It’s a Good Idea to Refinance
There are several situations in which it may be beneficial to refinance your car loan.
One is if you’re trying to take advantage of lower interest rates.
Doing so will lower your payment, but most importantly, it will decrease the amount of interest you have to pay on the loan.
What are the pros and cons of refinancing your car?
Pros of refinancing a car loan
- Lower interest rates. Most people are drawn to the appeal of lower rates which reduce interest expenses and the total cost of the loan.
- Reduce payments and extend your loan.
- Improved cash flow.
- A more accessible lender.
- Higher interest rates.
- Larger interest costs.
- Refinancing fees.
When should you refinance your car?
Rules of Thumb on When to Refinance a Car Loan
- Wait at least 60-90 days from getting your original loan to refinance.
- Consider refinancing after six months.
- If you are a first-time car loan borrower, wait at least a year to refinance your loan.
How does it work when you refinance your car?
Refinancing a car loan involves taking on a new loan to pay off the balance of your existing car loan. People generally refinance their auto loans to save money, as refinancing could score you a lower interest rate. As a result, it could decrease your monthly payments and free up cash for other financial obligations.
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