Your monthly car payment can be a big part of your budget, but there are ways to reduce the cost and get a better deal on your auto loan with a refinance.
While refinancing may be a good option to help you manage your money with a better deal or lower interest rate, there are still some things you should take into consideration before you sign on the dotted line, like hidden expenses or the time it may take to process your loan.
Keep reading to see if you've noticed any of these common signs that it may be time to consider refinancing your auto loan.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $15 the first year with auto-renewal.
Rates have dropped
/images/2024/10/15/customer-signing-car-purchase-adobe.jpg)
The Federal Reserve recently dropped interest in the third quarter of 2024. Lower interest rates can translate into a lower monthly payment, especially for anyone who took out an auto loan in 2022 or later.
There's a better deal out there
/images/2024/10/15/customer-finishing-paperwork-adobe.jpg)
Some car shoppers are in a rush to get behind the wheel, which means sometimes taking a loan with less favorable terms simply because you have to.
Now that you have your car and can choose to take your time, you may be able to shop around and find a better deal than the one you currently have.
Your situation has changed
/images/2024/10/15/mortgage-credit-application-approval-adobe.jpg)
Things can change during the life of your car loan, and that includes your own financial situation.
You may have changed jobs, resulting in a higher income, paid down existing debts, or made other money moves that have boosted your credit rating.
These changes can have an impact on your ability to get a better deal on a loan so talk to a bank or financial institution to see if your better financial outlook translates into a better deal.
Borrow up to $50k to finally crush your debt
If you have thousands in debt and you’re barely making it paycheck to paycheck, you know how suffocating it is. Debt is always on your mind. It controls your life. And even if you make on-time payments, they’re so expensive that you have nothing left over.
A personal loan could help you get out of this situation and lift your monthly debt burden significantly. You could finally pay off all of your debt at once, get rid of the sky-high interest rates, and slash your debt load to one manageable monthly payment.
AmONE is a marketplace where you can find some of the best personal loans available. They match you with loans up to $50,000 with rates as low as 2.49%. That’s better than most credit cards. And easier than draining your bank account every month. Seeing what you qualify for doesn’t affect your credit score, and if you’re approved, you could get money the next day.
Your adjustable-rate loan is about to expire
/images/2024/10/15/men-reading-personal-loan-contract-adobe.jpg)
If you opted for an adjustable-rate loan when you signed your original car loan, you may now be able to refinance your loan to lock in a fixed rate instead.
Of course, you may want to do some research into this decision to see if refinancing out of an adjustable-rate loan will put you into a better position long-term first.
You want to reduce monthly payments
/images/2023/02/12/couple_with_a_laptop_doing_finance_paper_work.jpg)
If you're hoping to keep a little extra cash in your pocket at the end of each month, you may want to see if you can refinance into a lower monthly payment by extending the life of your loan.
However, those considering this option should carefully consider how much money this will cost in the long run. While reducing monthly costs can help you in the short-term, you may end up paying more for your car thanks to the additional months (or years) of interest.
Trending Stories
You don't have prepayment penalties
/images/2024/05/21/business-woman-consulting-some-invoices.jpg)
In order to refinance your loan, you'll likely have to pay off the existing loan with your lender before starting the new terms on your refinanced loan.
But paying off the previous loan could mean paying a fee known as a prepayment penalty. Double-check the terms of your loan to verify whether you will owe money for paying off your loan early.
If not, you can move forward with an auto loan refinance without having to worry about the added costs associated with closing out your existing loan.
You want a new lender
/images/2024/04/05/coworkers-laughing-and-talking.jpg)
If you're unhappy with the lender that holds your auto note, you may want to consider refinancing simply to get away from them.
Bad customer service, lost payments, or frustrating communication practices can all leave a bad taste in your mouth, making the idea of refinancing with a new lender sound appealing, especially if you can get more favorable terms elsewhere.
Bottom line
/images/2024/10/15/man-signing-contract-adobe.jpg)
A car loan is a major financial investment. But, when it comes to having a car, it's important to consider some of the other potential costs that can arise, like maintenance and fees.
To keep track of all of your car-related expenses, you may want to create an estimated budget for your car that includes costs like gas, maintenance, and possible repairs.
It's also important to shop around for the best car insurance to help you keep some cash in your pocket.
- You could save up to $600 with some companies
- Compare dozens of providers in under 5 minutes
- Fast, free and easy way to shop for insurance
- Quickly find the perfect rate for you
Subscribe Today
Unlock the Best Banking Deals and Bonuses
From high-yield savings accounts to cashback checking and sign-up bonuses, we bring you the best banking offers to grow your money smarter.