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Should I Refinance My Auto Loan?
Interest rates rise and fall, and when they go down, it’s time to ask yourself, “Should I refinance my auto loan?” If you have the opportunity, and you can get a rate that’s lower than what you have now, then the answer is almost certainly “Yes.”
Refinancing is something you can do at any time. Unless your current loan has some kind of penalty for early payoff (and this is definitely something you ought to check), then you should be able to refinance as long as you get a lower interest rate. That’s the key. There’s really no reason to refinance your auto loan unless you can save yourself some bucks. This is exactly what happened to me. I was asking, “Should I refinance?” My auto loan had a pretty high interest rate and I’d seen my friends getting much better deals when they purchased their own cars.
As I was deciding on whether to refinance my auto loan, I did a little investigating. I applied for a couple of refi loans with a couple of different companies, and discovered that I could qualify for a much better rate than the one I had already. I knew I was on the right track. One of the lenders had a particularly good rate, and after we did some calculating, I realized that I could save more than one hundred dollars every month just by doing my refinance with them. This answered the question of should I refinance my auto loan, and brought up a new one: why hadn’t I done this sooner?
Once I knew which company I was going with, it was just a matter of going through with it. I contacted my current lender (the one with the high rates) and requested a payoff amount. There was some back and forth between them, and also with the new lender who would be doing the payoff. We figured the deal so that the term remained exactly where it had been. That way I wouldn’t extend it and end up paying more in interest. Within a week or so, everything was in place, and I was making my payments to a new finance company.
It’s a no-brainer to get a refi when you find you can get a better rate somewhere else. As long as there are no penalties involved with an early payoff, there’s no reason to hesitate. Don’t ask, “Should I refinance my auto loan?” Ask who you’re going to refinance it with, and what kind of rates you’re going to get. Then you can get it done and start saving money.
James Mayfield is the Director of Content at Santander Consumer USA and has been creating content on financial topics for more than 10 years. In addition to writing for the Santander, RoadLoans and Chrysler Capital blog sites, his work has…
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