Refinancing a Car Loan Biddeford ME
Westport Island, ME
South Portland, ME
Refinancing a Car Loan
Refinancing an auto loan can be a good way to reduce monthly payments. However, it often doesn't bring the benefits that borrowers expect. Let's take a look.
How refinancing works
A car refinance loan is no different than any other used-car loan. You determine the payoff balance on your old loan, arrange for a new loan, pay off the old loan, and begin your new loan. The new loan replaces the old.
A refinance loan does not have to come from the same loan company as the old loan.
It is possible that your auto loan company will be willing to modify the terms of your existing loan if you are in serious financial difficulty and need to lower your payments. This is unusual and should not be your only plan. Contact your bank or loan company to find out if this is possible in your case.
There are only two ways that refinancing a car loan can lower your monthly payments: 1) by lowering interest rate, and 2) by extending the payoff schedule, or both.
Will refinancing really help?
First make sure your refinancing expectations are realistic. What are your car loan payments now? How much do you want to lower your payments? Are you willing to extend your loan for a couple more years?
Refinancing can reduce your car payments if there is a difference between your old interest rate and the rate that you might get now. The benefit is greatest if your old interest rate is very high – possibly because your credit score was low at the time, or ...