When we think of refinancing, we typically think of home refinancing but a real opportunity for savings also exists by refinancing your auto loan. Many people get their auto loans through the dealership from which they purchased their car. These dealers are often allowed to markup the interest rate in exchange for selling the loan. Markups can be from 2% to 4% which result in a higher monthly payment for the consumer. But, the dealer markup is not the only reason to refinance your vehicle. If, when you first applied for the loan, you were considered a subprime borrower, chances are you’re paying a high interest rate, possibly up to 12% APR. It’s not unheard of to hear of 18% APR rates for those with poor credit. It doesn’t take much to be considered a subprime borrower. If you have less than perfect credit, you were likely put into that subprime category. Oftentimes circumstances change during the course of a few years. Maybe you received an increase in salary, maybe your credit score has inched higher; whatever the reason, you probably qualify for a loan with lower interest.
If you drop your interest rate by even only a couple of points, the resulting savings is in the hundreds of dollars. One of the big questions is; how do you go about refinancing your automobile loan? Fortunately there are firms which connect the consumer to the right lender. These firms will shop the best rate for you and explain exactly what the savings and benefits would be with your new loan. When you are ready to say, “slash my payments”, a recommended firm is Ignition Financial. Here you get the expertise and experience you need to make the most of your refinance.
While lowering your interest rate and thereby your monthly payment is the number one reason to refinance your automobile, another benefit is that you may be able to shorten the term of your loan. For example, if you took out a six year loan and have made three payments on it, it may be possible to convert that to a five year loan with lower interest. You do need to make sure to have a company like Ignition Financial on your side to help you navigate the terms and get you the best deal.