Car Refinancing should you do it?

If you have been suffering with bad credit car loan rates and followed a few things to improve your FICO score you may want to look at refinancing your car loan.  There are a few things to you want to look at before deciding to refinance.

1. How much do you owe on the car loan
2. Is there a prepayment penalty on the current auto loan
3. How long do you have to pay off the loan
4. Is the savings worth it
   

How long do you have to pay off your car loan

If you only have 6 months to pay off your loan you may not want to refinance.  Most of the interest is paid up front so what you are paying on now is mostly principal.  Some lenders may want you to extend out the length of the loan.  For example if you have only 6 months a lender may want you to take out a 2 year loan.  Again you would have to do the calculations.  ou could end up paying more in interest, even at a lower rate, then if you just finish paying off your current loan. 

How to lower your current car loan payments

Do you have a prepayment penalty.  If you do you will have to factor that into refianancing.  If you can not save money on refinancing then there is not reason to refinance.  If you need to lower your payments then you might have to refinance even if you are paying more in the long run.  If you need to lower your payments there are a couple of options.

1. Talk with your current lender and see if they will refinance for a longer period to lower the rates.  They may not charge you a fee for doing this either.  Some lenders will do this and some will not.
2. See what type of trade in you can get.  If you can pay off your current loan and lower your payments with a different car that might be a good option.

Savings and time are the items you want to look at on a car loan

It is breaking out the calculator.  If you are considering refianancing a car loan it is for a few reasons but the main one is to save some money or shorten the car loan repayment.  If you are paying extremely high rates and you have say 4 years to pay you do have some options to look at and some of them were discussed above.  The main points to crunch numbers on are:

1. Time left on car loan
2. Interest rate on car loan
3. Prepayment penalties on car loan - if you pay the loan of early
4. Buying a different car things to look for in this are

• Better car loan interest rates
• Length of car loan
• Better car for less money
• You need to lower your monthly car loan payments