If you purchased a new or slightly used car more than a year or so ago, it might benefit you to re-evaluate the auto loan rate you are paying on the car loan. Interest rates fluctuate and you should always be aware if the loan you are paying off now is the best deal or not for you. Circumstances in your life may have changed. This can affect the interest rate you qualify for and you may be able to save money with a refinance loan from a new auto loan lender.
Find Current Used Car Loan Rates
The first thing you should do to determine if you’re paying too much in interest charges on your car loan is to find out what current used car loan interest rates in your area are. Interest rates do vary slightly in different parts of the country. Therefore, you need to find rates that are being offered in your area.
The easiest way to do this is to visit websites like BankRate.com and Interest.com. These websites allow you to select your city and state and then will display a list of banks and the interest rates they are currently charging for used car loans. This will give you a good idea of the average rates in your area and also let you know how your current interest rate compares.
If the rate you’re currently paying is lower than the listed rates on either of these websites, then chances are you have received a pretty good deal on your car loan and should probably leave things as they are. However, if the rate you’re paying is more than two or three percentage points higher than the rates listed, you may want to consider a new loan option.
Review Used Car Refinance Rates
The above mentioned websites will also allow you to research interest rates for car refinance loans in your area. You will probably find that refinance loans are half a point to a full percentage point higher than most used car loans. However, research the rates in your area to determine if a refinance loan makes sense for you or not.
Escaping a Bad Credit Car Loan
If you purchased your last vehicle at a particularly difficult time in your life, and you were having financial trouble at the time, you may have been offered a car loan with a fairly high interest rate. If this is the case, and you have made timely payments for the last 1 to 2 years, you will probably benefit greatly from a refinance loan. The used car loan interest you are presently paying is probably considerably more than you could get with a refinance loan. So, request several car loan quotes both online and in your area to see if you can get a better deal.
When To Stay Put
If your credit situation has worsened since you purchased your vehicle or you only have a short time left on your car loan, you probably shouldn’t consider a refinance loan. If you have experienced recent credit problems, you’ll probably receive a higher interest rate than you are currently paying. Also, if you only have a few months left on your car note, you may wind up paying more in application and documentation fees than you would save with a lower interest rate.