Car Refinance: Things To Know

With auto sales seeking to recover, now may be the time to consider available car refinance options. The advantage of slow auto sales is that it provides opportunities for existing car owners to rework their old loan arrangements and lower their payments. Here are a few things that you may want to keep in mind when considering an auto refinance loan.

Rates for refinanced auto loans are currently below 6 percent for loans up to 60 months. With current market interest rates being held lower to stimulate economic growth, it may be worthwhile to investigate what savings may be available for you to refinance an existing loan.

A loan of $20,000 at 7 percent adds $1,400 to the payments or $1,783 a month. Reducing the loan through refinancing from 7 to 6 percent brings your monthly cost down $17 or by $200 a year. That could represent a significant savings for you.

Once you have an understanding of the loan rates available, ask to meet with the representative servicing your loan. This should be easy to accomplish as many businesses are seeking to maintain their relationships with existing customers that are responsible and pay their bills on time.

Ask the representative for a comparison of rates and disclose that you understand the current market and where rates should be. The finance representative or manager may be able to offer you a better refinance deal than what is being currently offered or publicized. Do not be afraid to ask if any special rates exist.

Ask to see the new payments with the proposed refinance rate. You need to know if there are any new fees related to the refinance and how they will affect your loan. It is also helpful to know if refinancing your loan triggers penalties or fees associated with your previous loan. This information is useful to in order to keep you from making a mistake or incurring any hidden fees or penalties.

The terms of the new loan should be clearly expressed in the agreement. Anything that is not clear to you should be clarified before you sign.

Check the interest rate in the agreement and make sure that it matches the rate you agreed upon. Also, check to see that the rate being offered is not an introductory rate or triggers some balloon payment at the end of the loan period. These items are sometimes hidden in the contract and could pose a problem for you later on. This type of activity may also be illegal under some states full and fair disclosure laws. Check with your local Better Business Bureau or State Corporation Commission if you suspect an unfair trade practice.

When dealing with car finance, you can be ahead of most by knowing your options and doing the research. Use the advisements above as a guide to get you going in the right direction.