There are definite benefits to refinancing auto loans, but there are also some aspects that you should beware of before you decide to refinance your car or truck. While this is a sure way that many take to save money in the form of lower interest rates (APR) and monthly car payments there are many more that either don't know about refinancing or do not consider the savings benefit of doing so.
What is car refinancing? It is similar to refinancing a mortgage but a less complex process that is faster. Essentially your current auto loan is paid off from the original lending institution at a better rate by a new lender. It is this reduction in the rate of interest that will lower your month car payments and that may also allow you to pay off your auto loan faster. In some cases the reduction in your auto loan interest rate and payments can be dramatic. This alone is worth investigating your options, which can be done quickly online. Today free, no obligation auto loan refinance quotes can be found, secured and compared with a little amount of time and the click of a mouse.
Refinancing auto loans for people with a bad credit history is also available and a great choice. Out of all the people who decide to refinance, you stand to realize the lowest interest rate reductions and auto loan payments. If a year or so ago you acquired a sub-prime car loan with a high interest rate because of a poor credit history but have gained stability in employment and this is reflected by on time car payments, you may now be qualified for a substantially lower interest rate. It makes the most sense for you to make certain that you are not paying more than you have to by refinancing your auto loan or at least researching it.
When you choose to refinance your current auto loan you can keep the same or reduced terms (length of time) as your current loan, but at a lower interest rate, this will allow you to pay off your car faster. But you can also choose to have lower payments by extending the terms that remain on your current loan. Doing this can result in you paying more interest over the life of the car loan, even with a lowered interest rate.
Keep this in mind, it is most beneficial for you to refinance an auto loan sooner than later. You will see more savings when you refinance your loan quickly, within one to two years, since most of the interest of an auto loan is 'charged' in the beginning portion of the loan. You will save more money, this could allow you to pay off your car loan ahead of schedule.
You know if your current auto loan rate and payments are excessive, now you can find relief. Comparison is the key here. Your local bank or credit union if you are a member, are great places to start. Most have a presence on line where you will find them and other reputable lenders willing to refinance your loan at their current, lower rates and terms. Compare at least three lenders quotes online to find the lowest APR for refinancing auto loans and the best terms, especially for people with bad credit.
Get More information on getting the best auto loans quotes click here Refinancing Auto Loans Also go to http://e-BestAutoLoans.Com where you will find valuable information and articles on bad credit auto loans, auto loans online, best auto loans, new and used auto loans and more.
By Rhonda Strump
Wednesday, May 21, 2008
Car Buyers' Blunders When Getting A Car Loan
American car buyers, especially new car buyers, have developed really bad car buying habits. Many do not notice it, but they are actually spending unnecessarily more than they should. To avoid wasting money, it is best to avoid these car buying blunders:
Blunder #1: Applying for a car loan without first checking your credit score
It is really easy to know your credit score by going online. Your credit score directly affects the loan terms available to you. Knowing your credit score gives you an idea of what car loan terms you could qualify for. Therefore, you would more or less be able to identify if you are being scammed with a higher interest rate than necessary.
In addition, knowing your credit score can actually help you make sound decisions. If your credit score is below 500, then it is best to pass up on applying for a car loan until you've fixed up all your finances. Your credit score gives you an idea of how good/bad your current financial state is. People unaware of their current financial state continue applying for loans, incurring higher interest rates in the process, and end up deeper in debt. If you can't afford a car, don't buy it! Instead, try to find ways to improve your credit score. The sooner you improve your financial state-and consequently your credit score-the lower the loan rates available to you would be, hence, the more affordable things become.
Of course, many Americans have bad, but bearable, credit ranging from 550-650. The wisest thing to do is to keep trying to improve your credit until it is considered good (680 and above). However, if you find it a hopeless task to do so, there are still reasonable bad credit car loans offered by certain lenders. The best way to find these offers would be by searching online.
Blunder #2: Failing to Research
The Internet is a great tool for finding valuable information on just about anything, and this includes car loans. It's therefore surprising why so many car buyers fail to research online before applying for a car loan.
There are many benefits of going online. For one, searching offers online allows you to have a sense of the going rate for car loan terms. It becomes easier to spot deals that are reasonable.
Moreover, car loan offers online are often direct offers from lenders competing to land deals with potential car buyers. This means that online offers usually have lower and more competitive interest rates compared to offers from dealers. Lower interest rates yield lower interest costs for the buyer.
Blunder #3: Going straight to the dealer
Directly financing a car loan with a lender (that can easily be done online) is convenient and more reasonable because of lower interest rates. Unless you can qualify for a 0% interest on a car loan, going to a dealer is really impractical.
In addition, dealers propose many add-ons in their offers. These extras (window tints, leather seats, alarm installations etc.) only bloat up the sales price of the car without necessarily adding value to the car. In fact, some of the add-ons increase the car's depreciation value which is never good for the borrower. Unfortunately, many car buyers are still persuaded to get the extras.
Blunder #4: Being obsessed with monthly paymentsAnother blunder includes car buyers focusing too much on the monthly payments. There are still some people who think that lower monthly payments mean less expense. On the contrary, lower monthly payments usually mean a longer loan term that yields a higher interest cost. Even if the monthly payment is low, by the end of the term, you would have still paid more overall.
Car buyers should learn how to look at the Annual Percentage Rate (APR) to compare loan offers. The APR reflects the borrower's total cost of credit expressed as an annual percentage of the amount of the credit. Basically, the lower the APR, the better it is for the car buyer.
Johanne Climaco specializes in providing valuable information to people keen on buying a car.
Blunder #1: Applying for a car loan without first checking your credit score
It is really easy to know your credit score by going online. Your credit score directly affects the loan terms available to you. Knowing your credit score gives you an idea of what car loan terms you could qualify for. Therefore, you would more or less be able to identify if you are being scammed with a higher interest rate than necessary.
In addition, knowing your credit score can actually help you make sound decisions. If your credit score is below 500, then it is best to pass up on applying for a car loan until you've fixed up all your finances. Your credit score gives you an idea of how good/bad your current financial state is. People unaware of their current financial state continue applying for loans, incurring higher interest rates in the process, and end up deeper in debt. If you can't afford a car, don't buy it! Instead, try to find ways to improve your credit score. The sooner you improve your financial state-and consequently your credit score-the lower the loan rates available to you would be, hence, the more affordable things become.
Of course, many Americans have bad, but bearable, credit ranging from 550-650. The wisest thing to do is to keep trying to improve your credit until it is considered good (680 and above). However, if you find it a hopeless task to do so, there are still reasonable bad credit car loans offered by certain lenders. The best way to find these offers would be by searching online.
Blunder #2: Failing to Research
The Internet is a great tool for finding valuable information on just about anything, and this includes car loans. It's therefore surprising why so many car buyers fail to research online before applying for a car loan.
There are many benefits of going online. For one, searching offers online allows you to have a sense of the going rate for car loan terms. It becomes easier to spot deals that are reasonable.
Moreover, car loan offers online are often direct offers from lenders competing to land deals with potential car buyers. This means that online offers usually have lower and more competitive interest rates compared to offers from dealers. Lower interest rates yield lower interest costs for the buyer.
Blunder #3: Going straight to the dealer
Directly financing a car loan with a lender (that can easily be done online) is convenient and more reasonable because of lower interest rates. Unless you can qualify for a 0% interest on a car loan, going to a dealer is really impractical.
In addition, dealers propose many add-ons in their offers. These extras (window tints, leather seats, alarm installations etc.) only bloat up the sales price of the car without necessarily adding value to the car. In fact, some of the add-ons increase the car's depreciation value which is never good for the borrower. Unfortunately, many car buyers are still persuaded to get the extras.
Blunder #4: Being obsessed with monthly paymentsAnother blunder includes car buyers focusing too much on the monthly payments. There are still some people who think that lower monthly payments mean less expense. On the contrary, lower monthly payments usually mean a longer loan term that yields a higher interest cost. Even if the monthly payment is low, by the end of the term, you would have still paid more overall.
Car buyers should learn how to look at the Annual Percentage Rate (APR) to compare loan offers. The APR reflects the borrower's total cost of credit expressed as an annual percentage of the amount of the credit. Basically, the lower the APR, the better it is for the car buyer.
Johanne Climaco specializes in providing valuable information to people keen on buying a car.
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