Refinancing an auto loan can save you a lot of money on your monthly payment. Borrowers can refinance to get the best bang for their buck and pay off a loan quicker.
But it’s not always the right time to refinance. Auto Credit Express’ Megan Foukes tells you when it is:
If you can land a lower interest rate— Whether your credit was worse when you took out the loan or overall interest rates have dropped, refinancing can allow you to get a lower APR. Most people with bad credit auto loans get a higher interest rate, but you could get a lower rate if you’ve improved your credit, which will help you save money.
Financial status changed— If you’ve received a promotion or changed jobs, you can refinance to shorten the loan term in order to pay off the loan more quickly and save in interest charges. If, on the other hand, your financial situation has gone sour, you can refinance your loan and extend the term to lower your monthly payment. The downside is that, in most cases, you’ll have a longer loan and pay more in interest in the long run.
If either of these apply to you, refinancing is a viable option. Just make sure you know what you’re trying to accomplish before you do it.