Refinance your existing car loan? Really?

What is Auto Refinance?

I'd bet that many of you have never heard of it.  I used to work at HSBC Auto Refinance, and I'd never heard of it either.  I didn't realize that a lender would refinance a depreciating asset, but they will if you meet their criteria.

Compared to mortgage refinance, which is quite ubiquitous, auto refinance is not as well-known.  But, car loan refinance is very similar, at a high level, to refinancing your mortgage. 

Here's how it works, generally.  Another auto lender evaluates your loan and terms and might conclude that they can offer a better rate than your current lender.  The new lender will pay-off your
current loan with your lender and assume the rest of the balance, presumably at
a lower rate.   

 

Unlike mortgage refinance, car loan refinance is much simpler, faster, and cheaper to do. Often times there are no fees at all to switch your loan to another lender. 

You can learn more about auto refinance at my website:  www.autorefinancereview.com.

 

Why refinance now?

The Federal Reserve has slashed interested rates over the past 2-3 years.  The Fed Funds rate is 0.25% (down from 1.00% last year), which is at 30 year low.  This metric determines what banks charge consumers.  The cost of money is cheaper for banks, so their rates are better now.

 

Reasons to refinance your car loan?

• Decrease your interest rate
• Lower your monthly car payment
• Remove a party on the lien (ex: divorce)
• Cash out - get a new loan for more than you owe on the current loan

I'll write more in upcoming posts.  But suffice it to say, if you are paying more than 10% on your auto loan, then it would behoove you to research this financial instrument.  Upside:  Many lenders suggest that you can save $30-$80 per month with a refinance.  Downside:  You spent 15 minutes applying and didn't get approved.