Should You Refinance Car Loan?

2008-09-26 11:31:39

( Financial )



When you have adverse credit loans, you might think that to refinance car loan is a good idea. While lenders may claim that it makes sense to refinance car loan because you can save thousands of dollars, some financial experts suggest that this claim may only make things worse.

There are few instances when it would be beneficial to refinance car loan. Some of these instances are when you want to pay lower monthly bills and would want to extend the life of you loan, or, if at the time you took out the loan, it was charged with higher interest rate in the dealership and current refinancing offers are of lower rates.

On the downside, when you refinance car loan, you should consider the fact that cars depreciate every year. It is not unusual to see the value of the brand new car you purchased three years ago has decreased to about forty-five percent. You might find yourself owing an amount which is more than the worth of your car when you refinance car loan. If this is your case, some lenders would not grant you refinancing unless you put up an upfront cash which is tantamount to the value of your car minus the amount of your loan.

If you still find, after you do your calculations, that it makes sense to refinance car loan, then you can start to shop around. The process to refinance car loan is just the same process when refinancing student loans.

But if you think that it is not wise to refinance car loan, one of the alternatives that others do is to trade in the car and begin with another loan all over again. Another option is to obtain home equity loan or line of credit, which may have lower interest rate but require your home as collateral.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.