Depending on how much you owe and the value of your vehicle, it could be a good idea to refinance your existing auto loan.
Refinancing an auto loan could be a great choice to lower your monthly payments in certain situations. In others though, it can run high risks that will cost you down the road.
Good vs. Bad of Refinancing
At Auto Credit Express, we want you to make the best choices you can with the auto financing we helped you find. That’s why we want to show you the good and the bad when refinancing your bad credit auto loan.
Lower Monthly Payments-
Obviously, the most popular reason why people are interested in refinancing their auto loans is to lower their monthly payments. This can free up cash for other areas in your budget.
Lower Interest Rates-
Another benefit that many don’t think of is the opportunity to lower their interest rates. If you’ve been making your payments on time, your credit score and your history with the dealer should have greatly improved; thus giving you the opportunity for better rates.
High Risk of Going Upside-down-
This is unfortunately all too common. Many times, the low payments you want to make will not keep up with the rate of depreciation of your vehicle. This means you could end up in a situation where you owe much more than your vehicle is even worth. This makes it difficult to use your vehicle as a trade-in; however not impossible either.
Stuck with an Older Car Longer-
One of the ways that refinancing lowers your monthly payments is to extend the term of the loan. This may sound okay to begin with; but if you’re someone that prefers to have a somewhat newer model vehicle, this may not be a favorable option. Making lower payments often means that you’ll be staying with the same vehicle for five years or more.
As We See It
Choosing when to refinance is a big decision to make. Speaking to your current auto dealer or lender may shed even more light on your specific situation. However if they’re not able to give you good information, don’t hesitate to complete our free application to find a dealer in your area that will have better news for you. It will only take you a few moments to complete and find the solutions you need.
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