There are many reasons to refinance your vehicle. Some of the most common include getting a lower interest rate, canceling insurance, and saving on loan payments. However, an overlooked reason is improving your credit score and securing more money in your bank account.
Get a lower interest rate
There’s no reason to pay more than you have to on your loan. If you’re paying more than the average interest rate, it might be worth looking into refinancing. According to Experian, the national average for a new car loan is 3.87%, while the national average for used cars is 4.2%.
But suppose you can get that number down by refinancing your current lender. In that case, it could be worth it—depending on how long you plan on keeping your vehicle and whether or not there are any other fees associated with refinancing (there shouldn’t be). You can use a vehicle refinance calculator to calculate rates.
Cancel Insurance
Consider refinancing your vehicle to get a lower interest rate, pay off your auto loan, and cancel the insurance. This can save you money on car payments as well as car insurance premiums.
In addition to lowering your payment and interest rate, refinancing can make it easier to qualify for other loans depending on how much equity you have in the vehicle after refinancing.
By refinancing rather than buying new wheels outright, not only do you get more money in hand but also greater flexibility when it comes time for repairs or maintenance because there isn’t any residual value tied up in having been paid off early. There may even be some positive effect on resale values too!
Save on Loan Payments
One of the most compelling reasons to refinance your car is that it can help you reduce monthly payments. Refinancing at the end of a loan term usually means lower interest rates, which translates into lower monthly payments. A shorter-term loan will also result in lower monthly payments unless you find a lender willing to offer the same rate on a longer term.
If you’re considering refinancing your vehicle and want to know what kind of savings could be, check the use rate calculator tool online.
Improve Your Credit
- Improve Your Credit
If you have a low credit score, refinancing can help you improve your credit. Because the loan is paid off more quickly, you’ll have lower monthly payments and less interest to pay. You can use this money to build up your good credit by paying off other debts or keeping up with bills on time every month.
- Pay Less Interest
If you’re able to refinance at a lower interest rate than what’s currently on a car loan or mortgage, you’ll save money in the long run by having lower monthly payments. By using some of that extra cash for something else (such as savings), it will compound into even more savings over time! According to Lantern by SoFi professionals, “Refinancing your car loan can decrease your interest rate.”
Refinancing is a great option if you’re looking for a way to save money on your vehicle. If you have good credit and are currently on payments, refinancing can help you get lower rates and save thousands of dollars over the life of your loan.
