How to Refinance New Car Loan Rates

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, - January 8, 2014
Refinancing your new car loan is easy. When it comes to refinancing, most people associate the term with home refinancing. This is probably due to the fact that a home is the single biggest investment you'll make in a lifetime. But what's the 2nd biggest investment? You guessed it--your car is. Refinancing your new car loan is a surefire way to hundreds if not thousands of dollars per year.

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In today's economy, people are looking for ways manage their shrinking budgets more efficiently, so if you took out a car loan a few years ago or if you had poor credit when you purchased your last car, this could be the perfect time for you to look into refinancing your can loan rate since interest rates have been dropping.

Here's an example

For example, say you took out a five-year loan for a $28,000 car at a 10% APR. Your monthly payment would be $603.84. Now, if you were to refinance your car loan at a 7% APR, your monthly payment would be $554.43, a savings of $49.41 per month. That might not seem like a lot, but that is almost $600 per year for every year of your loan term.

Steps to refinancing your new car loan The first step is to review your current loan documents. Make sure there aren't any prepayment penalties, because that would negate any savings you'd get from refinancing your car loan in the first place.

The second step to get your new car refinanced would be to find a company that offers car refinancing. The search is quick and easy. A company such as RateGenius offers an easy-to-use application that takes under a minute to fill out, making the process quick and painless.

The third step is to find out how much you owe to your current lender. Doing so is as easy as contacting them. Once you have the amount, you can calculate how much you would save by opting into the lower, refinanced APR. Percentages can be tricky, and not as cut and dry as you may think. But using those percentages to calculate the actual dollar amount you stand to save is much easier to understand.

Anything else I should know?

You may be thinking: if refinancing is such a good idea, why don't more people do it? The reasons are plentiful. The most popular excuse is that owners anticipate the same kind of grueling, paperwork-heavy process found in refinancing a home mortgage, when in fact it's quite the contrary. The online forms have been developed to simplify the process and offer an expedient way to navigate through the world of auto refinancing. Even the physical forms found at banks take only 5-10 minutes to fill out.

As the federal funds rate drops, most interest rates, including auto loan rates will also drop. Take advantage of the fact, and don't procrastinate. Doing so could be costing you hundreds of dollars a year.

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The CarsDirect editorial team is dedicated to providing our readers with the latest on new and used cars, expert opinions on which vehicles make the grade, and all the fun stuff in between.


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