New Car Loan Rates Can Encourage Car Refinancing

2007-03-08 10:33:40

( Financial )



With interest rates at low levels, new car buyers are getting generous deals. Under certain conditions of sale, you can get new car loan rates as low as zero percent.

This is different from only a few years ago, when new car loan rates were higher. At the time, if you wanted to get the best car loan rates from your auto financing company, you probably had to put up a large down payment on your new car.

When new car loan rates are at these levels, it makes sense to refinance car loans obtained at higher interest rates. Every percentage point that you can shave off from a higher interest car loan will save you a significant amount of money.

If you compare current new car loan rates with current refinancing car loan rates, the latter will tend to be higher. This is of no import to you because your objective is to get a refinancing car loan deal that will reduce the amount of your monthly payments.

But when you are considering refinancing car loan, you may have to rule out asking your bank. Banks are not keen on vehicle refinance since used cars (being depreciated) have less value to them. Your best hope for vehicle refinance would be online lenders and specialized auto financing programs like gmac car loans.

You could also try other loans sources to refinance car. A home equity line of credit is likely to have even lower interest rates (plus the added advantage of interest being tax deductible).

In order to fully realize the savings you can enjoy from refinancing car loans, you should try to cut the interest without stretching the payback period of your current loan. If you already have substantial equity in your car, then you can really get the best car loan rates on your vehicle refinance option.


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