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Posted by rota6566 on January 16, 2008, 11:18 pm
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Before you make the decision to refinance your car loan, there are
some things you need to consider. This article offers tips on what to
consider before refinancing your car loan:
Interest Rate
The most common reason a person wants to refinance is to get a better
interest rate. Perhaps you had bad credit when you took out your car
loan, and, now that your credit has improved, you want to refinance
under a better interest rate. Or, perhaps the prime rate is lower now
than it was when you financed, and you want to take advantage of lower
rates. A lower interest rate will save you a lot of money if you have
more than a year left on your car loan; however, interest rates are
not the only things you need to consider.
Prepayment Penalties
So, you've done all of your calculations, and you know that
refinancing under a better interest rate will save you a lot of money.
However, you need to consider prepayment penalties in your
calculations. Say that refinancing will save you $2000 over the life
of your loan. If your current loan has $2000 in prepayment penalties,
it's not going to benefit you to refinance. Check your loan documents
for information on prepayment penalties. If you'll be charged them,
make sure to add that amount into your calculations.
Length of the New Loan
If you currently have two years left on your loan, you're not going to
save money by refinancing under a better interest rate for a longer
number of years. For
http://www.dontplayplay.com/html/Finances/20060928/17181.html
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