Refinancing Is Not Always a Good Idea
your existing car loan is a good idea as
long as you can achieve what you are
trying to accomplish. Refinancing goals
are usually lowering interest rates or
extending loan terms so that monthly
payments are lower.
Below are some
scenarios where refinancing your car loan
just doesn't make any sense.
What is the
current interest rate on your existing
There is no need to refinance your car
loan if you have an interest rate of 6% or
lower. The likelihood of achieving a lower
interest rate is unlikely.
Is your car
a new car or a used car?
You will not get a lower interest rate
when you refinance a new auto loan. Why?
Because you will be refinancing your new
auto loan into a used car loan.
rates of used car loans are higher
than rates associated with new car loans.
What is the condition of your vehicle?
If the depreciated value of your car
has increased, the value of your car will
decrease. This can put you upside-down in
your auto loan. Meaning, the amount of
money you owe on your loan balance is more
than what the car is actually worth. Auto
loans are secured by the worth of the
vehicle. With the car being worth less
than the loan, the lender is taking on
more risk and will have to be compensated.
Higher compensation is achieved through
greater interest rates on the car loan.
If none of the
above scenarios pertain to you, then
refinancing you car loan still may make
sense. You can apply for a
free, no obligation refinance quote.
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