Why Should You Refinance Your Car Loan Online?

 

Refinancing your auto loan online can be a smart way to meet your monthly budget goals, save money, and even improve your credit score.  Done right, it’s like earning a free vacation.  We’ll show you how to refinance your car loan online now.

brooke-cagle-WHWYBmtn3_0-unsplash.jpg

Refinancing your auto loan online can save you money by:

  1. lowering your interest rate

  2. extending your loan term

  3. skipping a monthly car payment

or all 3.

To see how this works, meet Amanda.

Amanda owed $26,758 on her auto loan, with an 8% APR and 48 months left to go.  Since she took out her car loan, Amanda’s credit has improved (yay!).

Lower Interest Rate: Amanda’s monthly payment drops $25.

By refinancing her car loan, Amanda lowered her APR to 6%.  Amanda’s auto dealer could have offered her a 6.5% APR on her original loan, but marked up the loan by 1.5% (without telling Amanda – that’s legal!).  Amanda’s hard work to improve her credit saved her another 0.5%.  The result?  Amanda’s monthly payment dropped by $25 and she saved $1,190 in interest over the life of her loan.

Skip A Payment: Amanda skipped her monthly payment.

The first payment on Amanda’s new loan was not due for 45 days, which is typical for an auto refinance . Skipping that payment allowed Amanda to pay off $500 in credit card debt with a 24% APR.

Extended Loan Term: Amanda’s monthly payment drops $116.

Imagine if instead Amanda had extended her 48 month loan to a 60 month term, with a 7.5% APR thanks to her improved credit.  Her monthly payment would have dropped by $116.  Even though she would be paying the loan off for longer, her stress levels would decline instantly with a more manageable monthly budget.

Improve your credit score by refinancing your car loan online

Refinancing your car loan online can improve your overall financial health.  Here are some ideas:

  • Pay off credit card debt, part 1: Credit card APRs can easily top 20%, but the average APR for a new car loan is ~5%. You can refinance your car loan and use the savings to pay off credit card debt.

  • Pay off credit card debt, part 2: Part of your credit score includes how much you’re using the credit available to you, known as “utilization.” If you have a $500 credit card limit and a $450 outstanding balance, you are at 90% “utilization.” Getting your “utilization” down to 30% ($150 in our example), can improve your credit score.

  • Pay off a collection account. A collections account on your credit report can lower your credit score by 100 points. If you skip a payment by refinancing (like Amanda), you can put that money toward paying off old debts.


Read More Like This….

 
RefinanceJon F