How to Refinance Your Car and Save Money on Interest
If you're able to get a car loan with an interest rate substantially lower than your current loan, you may save money on refinancing your car.
To get out of debt you must question every financial decision, consider all the options available to you, and plan a way out of debt.
You may improve your cash flow each month and save on interest by refinancing your car.
Joel has been making a lot of progress in getting his financial affairs in order in a very short period of time.
During this interview he explained that decided to sign up for the One Paycheck at a Time online budgeting program, because he wanted to: oDesign a plan to get out of debt oIdentify where his money is going and how much he has left oAvoid late fees and stay ahead of his bills Joel has made some lifestyle changes in an effort to save even more money each month.
One recent decision was to rent an apartment with his brother.
He has committed to do this for one year while working to gain greater control of his finances.
Not everyone is in a position to change their lifestyle to this extent, but it worked for Joel.
Although Joel doesn't have any credit card debt, he did, however, have a car loan that still has 3 years left to pay.
A few years ago, Joel filed bankruptcy.
When he went to buy a used car, a 2001 Saturn, shortly after filing bankruptcy, he was offered and accepted a 17% interest rate.
Needless to say, this interest rate is very high! In fact, this interest rate is nearly double of most car loans if you have never filed bankruptcy.
Here is the breakdown of the car loan: Number of years on the loan: 5 Purchase price of the car: $10,000 Interest rate:17% Monthly payment: $248 By the time Joel would pay off this loan, he estimates he will have paid approximately $4,911 in interest! Since he filed his bankruptcy over two years ago but hasn't yet been discharged, he questioned if it made sense to shop for another loan.
Would anybody finance him? Without owning a home, Joel couldn't take advantage of borrowing money from any equity so he would need to see if a lending institution would be forgiving of his past debts.
With roughly $7,000 left to pay on his current loan he decided to go shopping for a new loan.
If he was declined, then at least he knew the answer.
In addition to getting a lower interest rate for the car, Joel was also hoping for a slightly lower monthly payment without stretching out the length of the loan past three years.
There are numerous online websites now where you can apply and compare offers from different lending institutions for car, personal, and home loans without cost or obligation.
This is a great advantage to the consumer since banks are vying for your business.
Joel didn't have a lot of loan officers calling him, but he did have one very reputable national bank offer the following terms: Number of years on the loan: 3 Purchase price of the car: $7,000 Interest rate:9% Monthly payment: $222 Once he pays off this loan, he will have paid $1,013 in interest - a savings of about $3,898 in interest! This was an easy decision.
There will be some paperwork fees that go along with the loan, but overall, Joel made a smart decision in refinancing his auto loan.
Depending on the lender, consumers may qualify for a lower interest rate if they agree to electronic payments.
This time saving payment method where your loan payment is automatically deducted from your checking or savings account may afford you a lower interest rate and you don't have to mail in your payment each month.
You may also be able to choose your payment date.
Be sure to ask about this with whatever financial institution you consider.
There are no guarantees that a financial institution can find you a better loan than what you have now, but if you don't try - the answer will always be no.
If you don't qualify this year, try again next year.
To get out of debt you must question every financial decision, consider all the options available to you, and plan a way out of debt.
You may improve your cash flow each month and save on interest by refinancing your car.
Joel has been making a lot of progress in getting his financial affairs in order in a very short period of time.
During this interview he explained that decided to sign up for the One Paycheck at a Time online budgeting program, because he wanted to: oDesign a plan to get out of debt oIdentify where his money is going and how much he has left oAvoid late fees and stay ahead of his bills Joel has made some lifestyle changes in an effort to save even more money each month.
One recent decision was to rent an apartment with his brother.
He has committed to do this for one year while working to gain greater control of his finances.
Not everyone is in a position to change their lifestyle to this extent, but it worked for Joel.
Although Joel doesn't have any credit card debt, he did, however, have a car loan that still has 3 years left to pay.
A few years ago, Joel filed bankruptcy.
When he went to buy a used car, a 2001 Saturn, shortly after filing bankruptcy, he was offered and accepted a 17% interest rate.
Needless to say, this interest rate is very high! In fact, this interest rate is nearly double of most car loans if you have never filed bankruptcy.
Here is the breakdown of the car loan: Number of years on the loan: 5 Purchase price of the car: $10,000 Interest rate:17% Monthly payment: $248 By the time Joel would pay off this loan, he estimates he will have paid approximately $4,911 in interest! Since he filed his bankruptcy over two years ago but hasn't yet been discharged, he questioned if it made sense to shop for another loan.
Would anybody finance him? Without owning a home, Joel couldn't take advantage of borrowing money from any equity so he would need to see if a lending institution would be forgiving of his past debts.
With roughly $7,000 left to pay on his current loan he decided to go shopping for a new loan.
If he was declined, then at least he knew the answer.
In addition to getting a lower interest rate for the car, Joel was also hoping for a slightly lower monthly payment without stretching out the length of the loan past three years.
There are numerous online websites now where you can apply and compare offers from different lending institutions for car, personal, and home loans without cost or obligation.
This is a great advantage to the consumer since banks are vying for your business.
Joel didn't have a lot of loan officers calling him, but he did have one very reputable national bank offer the following terms: Number of years on the loan: 3 Purchase price of the car: $7,000 Interest rate:9% Monthly payment: $222 Once he pays off this loan, he will have paid $1,013 in interest - a savings of about $3,898 in interest! This was an easy decision.
There will be some paperwork fees that go along with the loan, but overall, Joel made a smart decision in refinancing his auto loan.
Depending on the lender, consumers may qualify for a lower interest rate if they agree to electronic payments.
This time saving payment method where your loan payment is automatically deducted from your checking or savings account may afford you a lower interest rate and you don't have to mail in your payment each month.
You may also be able to choose your payment date.
Be sure to ask about this with whatever financial institution you consider.
There are no guarantees that a financial institution can find you a better loan than what you have now, but if you don't try - the answer will always be no.
If you don't qualify this year, try again next year.
