Loan Resource Guide

Whats the catch to refinancing a auto loan?

I’ve been thinking a bout refinancing my auto loan. But whats the catch. I’ve got a 16.59% auto loan . I’ve made my payments on time for the last 2 year on time. When i got the loan i had really bad credit now i’m in the 630-660

There are different reasons people will refinance a car loan. The three main reasons are to remove a name from the loan, pull possible equity from the loan, or most common, to lower the current monthly payment. Here is a brief explanation of trying to lower your payment:

If you have 3 years left to pay a car loan with a payment of $388 per month and a balance of $12,000, you might take out a new loan for the $12,000. However spread the balance over a 48- month term, then depending on the interest rate, you can lower your payment to $310 per month. The disadvantage to this method is you now have 4 years to pay on the vehicle instead of 3, which also means you will pay more money in interest over the term of the loan. Your second loan will sometimes have a higher interest rate than the first one, so before you refinance, make sure you understand the additional interest you will pay in relation to the lesser monthly obligation. Good luck and I hope this helps.