Auto Loans - How To Refinance For A Lower Monthly Payment
Refinancing a car loan is actually a lot simpler than a lot of people think
. Refinancing simply means to finance again. In practice, this just means that when you are refinancing you go out and get a new loan, and use it to pay off your old source of financing. People do this for a number of reasons, for instance, a lower interest rate, better terms, or for a lower monthly payment.If you've had your current loan for a little while and paid it off a bit it should be a bit easier to make this possible. Your new source of financing will be for a smaller amount than you originally got, so if you had originally gotten a deal where you paid $5,000 over 12 months and your monthly payments were $416.67, and it's been a few months and you've made a few payments and now only owe $4,000 on the original loan than your new deal for $4,000 could again be for 12 months and you would owe $333.33.
Obviously it isn't quite as straight forward as this as deals are typically done for varying lengths and money you owe on interest rates factor in to your monthly payment amount, but it displays the basic idea.
Interest rates are another factor to consider that will affect how much you pay each month. If you can find a lower interest rate at all this in itself will make refinancing worth it for you. You'll end up saving money both overall, and on your monthly payments, so make sure to keep that in mind while searching for a new deal.
Refinancing auto loans really is just as simple as going out and finding a new source of financing with a deal that you like better and using it to pay off your current debt.
by: Jennifer Quilter