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Refinance car loan


Here is refinance car loan information with tips on how to lower your monthly car loan payments and 5 things to consider before refinance your car loan. There are a lot of people paying high APR car loan every month. One of the most common reason lenders give high APR is bad credit car loansbut you can actually apply for lower rate and pay your less monthly payment. Anyone can refinance the car loan at anytime if you feel the APR rate is too high.

You may not know when you need to refinance your car loan. Some people may overlook this in their daily life. It will be good to understand more on why some people paying high APR.

  • The APR is high when you purchase your car.
  • Imperfect credit history and inadequate supportive documents when you apply car loan.
  • You made a mistake to choose a high APR car loan.
  • You purchase a used car that lenders gave high interest rate.

When and why need to refinance car loan

When to consider refinance your car loan? When you feel you are paying a stupid monthly car payment amount with high APR. Besides, if you are having other loans with higher interest rates like mortgage loan, business loan, personal loan, or housing loan, you should consider refinancing your car loan and using the cash you have on hand to pay off these higher interest rates loan.

How much you can save with lower APR

If you are having a car loan of $30,000 at 18% APR a year, and the loan term is 5 years. Your total interest on car loan will be

$30,000 x 18% x 5 years = $27,000 with monthly payment $950

You feel that is too much when you sign up the loan. Now you take one day leave from your company do all research and get quotation from several creditors and finally you get yourself a quotation to refinance your car loan at only 7% APR a year. The total interest on your car loan will be

$30,000 x 7% x 5 years = $10,500 with monthly payment $675

In total you will save up to $27,000 – $10,500 = $16,500 and pay less $275 every month. Why not?

Pay off higher loan with car loan

Here are some interesting tips. Let’s say now you have $100,000 cash on hand and you are planning to buy a new house that cost $200,000 and the home loan interest rate is 9% a year. You are planning to take the loan up to 10 years. As usual you will have to pay $100,000 home loan at 9% where the interest is calculated daily. The estimated total interest rate will be

$100,000 x 8% = $80,000 in 10 years, monthly home loan payment $1500

Think and think, you have a car parking in your garage that able to refinance $40,000 at APR of 3% a year and 5 years loan term. Let’s do it now. Refinance the car loan and get $40,000 cash. Make a payment of $140,000 to the house. Now you will only need to apply for $60,000 home loan at 8% which the total interest will be,

$60,000 x 8% x 10 years = $48,000 in 10 years, monthly home loan payment $900

Your car loan will be $40,000 x 3% x 5 years = $6000 interest, monthly car loan payment $766

In this case you will save up a total of $80,000 – ($48,000 + $6,000) = $26,000 from interest. The amount here is just an example. It depends on how much cash you have, what is the cost of the house, how much you can refinance your car, and how you calculate a monthly car payment. The more facts you consider, the more you can save.

5 things before refinance car loan

Here are the 5 things to do before apply to refinance your car loan.

Prepare a good credit history. Get at least a good record or good credit history for 6 months. Show the lenders your bank statement with monthly salary statement on time every month.

Organize all documents. A copy of your current car loan details, owners details, VIN number, make, model, and all documents related to the car will help to get good APR.

Show previous car loan record. Show it the lenders if you have a good previous car loan record. Alternatively you can show them the good record of some other loan like home loans or mortgage loan.

Get more quotes. No matter car loan or buying a mouse, you can always ask for more quotations online easily. Get more quotes until you found the best deal.

Car insurance, Lien, and bank information. You will need to update your payment information, Lien holders and your car insurance company once you have decided to refinance your car. This is to avoid any unwanted problems in future.

The secret to save more and more money is always thinking that you are having high loan APR rate. You can anytime save up a lot of money even though the difference is just 1%. If you are not getting a car loan between 0% and 3%, start your research to refinance car loan!
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