Can I Save On Monthly Payment If I Choose To Refinance My Bad Credit Car Loan?

When should I refinance my current car loan? You should always try to refinance your car loan

, always looking for a lower APR rate. Because even with 1% drop you can save significant amount per month, making your car loan more affordable. So let's imagine now for a second you have a $20,000 car loan on your hand, and you have already accepted an 18% annual interest rate or APR rate. Your 60 month payment with $0 down payment is $507 per month, do you realize after 5 years of repayment, you would have paid out $10,472 in interest? That is more than 50% of your original loan amount. While that sounds like a lot of interest, but don't be discouraged, you still have hope. Maybe some time ago you needed a vehicle to get to work, and the only option left is by taking on a bad credit car loan with considerably higher APR rate. You have been a good sport and making your payments on time for the past 12 month. Well now it's time to renegotiate your APR rate.

With you good behavior to back you up, you have leverage to bargain with the bank. If you apply for refinancing again, chances are you will be approved for a lower APR rate for the remainder of the term. Let's say you are approved for 17%, just 1% off from your original loan document. How much would you paid over the term? And what would be your monthly payment? Well let's use the same $20,000 for calculation. Your monthly payment now will be adjusted to $496 per month, with your accumulated total interest amount to drop to $9,823 that is $650 less in 60 month term. If that doesn't sound like a significant amount to you think again. After your first refinance document is approved, with more time you will be in the position to renegotiate again. Before you know it you are well on your way to your credit recovery.

by: Rick Li

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