Is it time to refinance your auto loan?
Posted on Monday, February 27, 2012 at 6:08:29 PM
During the credit crunch of the past two years, many consumers were stuck with high-interest rate auto loans. However, with a stabilizing economy, it may be time to consider new auto financing options in order to attain a better rate and reduce both monthly payments and the overall cost of the vehicle over time.
A financial institution such as a bank, credit union or alternative lender will consider if a consumer has paid all of her bills on time since she received the original loan, improved her credit score and maintained or increased her annual earnings. If those characteristics paint a picture of a responsible person, she may be able to refinance the loan.
"Not everybody in town is charging the same price," Greg McBride, senior analyst at Bankrate.com, told the York Daily Record.
According McBride, if a consumer took out a $20,000 five-year loan at 12 percent two years ago, the payments would be $444.89 a month. If the person’s credit score has improved, he or she may be eligible for a three year refinancing option at 4 percent.
Monthly payments would lower to $395.46 and the person would save $1,780 in the end, reports the news source. People should consider new auto financing options if their concerned over paying too much.