Should You Still Refinance Your Auto Loan? You Bet

A Credit Article Contributed by Mark Mcclelland

In Spite of the Rising Interest Rates, You Should Still Refinance Your Auto Loan

We all know that interest rates are starting to rise, and since the trend's not likely to reverse any time soon, that's why it makes perfect sense to refinance that auto loan now... and this isn't just some cheap sales ploy to get you top part you more of your hard earned money. In fact refinancing your auto loan can save you substantial amounts of money over the remaining lifetime of your loan, especially if you can cut a couple of points off your interest rate.

The advantages are even greater if you can maintain your current payoff but with a loan lesser interest rate. Over the remaining life of your loan you stand to save a substantial bundle of money on the interest charges alone, let alone the slightly lower monthly payment - making it easier to pay your other bills.

What about the Fees When Your Want to Refinance Your Auto Loan?

Well, if you're thinking that the fee structure is like that when you refinanced your mortgage, you should reconsider. While some lenders do actually charge a processing fee, those they do charge can't hold a candle to the bonfire that the home re-fi fees could fuel.

You do need to be aware of any fees associated with the transaction when you refinance your auto loan, and factor them into the overall savings equation. But even so, you could still end up saving a bundle over the long run.

If I Refinance My Auto Loan, What Do I Need to Be on the Watch For?

As with all financial contracts, (and even though you may hate it) you have to read the fine print. If you don't understand it, have your favorite lawyer tell you what it says, i.e. obligates you to.

Several good rules of thumb to use when deciding whether or not to refinance your auto loan might be to go ahead and refinance if your monthly payments are making it difficult for you to pay other bills, or the original loan carried a high interest rate because of a spotty credit history, or the new lower interest rate will dramatically improve you financial situation

All of these rules of thumb have a common thread: the interest rate and its impact on you finances. So, make sure you carefully work through the math if you refinance you auto loan for a longer period of time, even if you're getting a lower interest rate out of the deal. The longer payoff period may keep you from getting the next new car as soon as you'd like.

Pay particular attention to the terms of the refinance loan. If you credit history is a bit spotty you're refinance application may get approved but at an interest rate that may prevent you from being able to pay other bills; or worse still paying off your loan after the warranty runs out and the car starting needing major repairs.