Choosing the best auto to refinance loan can be a tricky task, especially if you do it for the first time. If you do the due diligence, you can save thousands of dollars on your new loan. Here are five tips to get you a leg up when researching an auto refinance loan.
Where to Get the Loan From?
You can opt for several options when deciding who to borrow from, such as credit unions, banks, and refinance companies online. Every option has its requirements, so it is better to compare and figure out which works best. For instance, credit unions have a policy to only lend to their members, though their lending rates are low. But CarRefinance.com makes it easy for you. Car Refinance works with a network of lenders to meet your needs.
APR of the Loan
When figuring out the best lender for your auto refinance loan, APR (Annual Percentage Rate) is a vital piece of information you need to know from any potential lenders. The figure is based on the prime rate in the United States charged by banks to their most responsible customers in the form of interest. If you happen to have a great credit rating, the APR on your auto refinance loan will be near the prime rate.
Shorter or Longer Repayment Term?
This is a customer consideration. If you want to own the car faster, you can go for larger monthly payments. This will also keep the interest payment as low as possible. On the other hand, if you are strapped for cash, you can opt for lower monthly payments to take longer to repay the loan. Also, it will result in higher interest paid overall.
Fees Associated with Refinancing Auto Loan
When taking out an auto refinance loan, it is important to look out for termination fees with the current lender and transaction fees for changing lenders. Different states have different rules, but you need to make sure you are making a net positive when choosing to refinance your car loan.
What Are the Effects on Car Insurance?
Newer cars have higher insurance rates since they are worth more. However, when you decide to refinance your car, your car’s value will be recalculated to a lower value. This can allow you to avail lower insurance rates. Moreover, several auto loan refinancers do not make it compulsory to have auto insurance, meaning you can reduce insurance premiums by dropping your coverage, but check with your lender.