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Should I Refinance My Auto Loan For a Shorter Term?

July 02, 2012 | Comments: 0 | Views: 193

While many people are aware that they can save a substantial sum of money by refinancing their home loan at a lower interest rate or by negotiating a better rate with their credit card companies, many individuals do not realize the very same benefits are available if they refinance their auto loan at a shorter term. Refinance car loans saves money for individuals who are stuck with a high interest rate. In fact, many people find that they can save as much is $100 a month or more simply by refinancing their car loan for more favorable terms. It may even be possible for a person to pay off their car sooner.

Refinance car loans saves money immediately and over the length of the loan. A person who is paying more than 7% interest on auto loan may be able to save hundreds of dollars every year. The savings are even more impressive the greater the loan amount since less interest means more money going to pay off the principal amount every time a person sends in the payment. The sooner that an individual take steps to refinance their auto loan, the more money they can save. This means that a person may have enough money to pay down other debts.

Of course, in order for an individual to successfully refinance their auto loan and save money, they need to be aware of what the current interest rate is that they are being charged. While it is true that refinance car loans saves money, most experts acknowledge that a refinance loan may not be worth the effort unless a person is going to shave 2% or more off of their interest rate. It is also important for a person to make sure that there are no additional charges being added to the loan and that the loan terms are acceptable for their particular situation.

Although refinance car loans saves money, a person can also benefit because a lower interest rate often means that they are able to pay off their auto loan much sooner. For example, refinancing an auto loan will mean that a person has a lower monthly bill. If the individual can still afford to make the original payment amount in spite of the fact that there new plan is substantially lower, they can effectively shape months, if not a year or more, off of their loan. This is not only beneficial for a person's credit score, but it also means one less debt hanging over their head.

About the Author: Chris Goodman has been in the auto refinance and lending business for more than 20 years and has assisted thousands of consumers with their car loan needs. He is an expert on car loans and car refinancing. Find more information at online at OpenRoadLending.com and see how easy it is to get your next car loan.

Source: EzineArticles
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