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3 Reasons to Consider Re nancing Your Auto Loan
(StatePoint) Most people know they can re nance their mortgage, but less than half are aware that they can also re nance their auto loan, according to a study by Harris Poll for Ally Financial. It’s a simple task that could reduce your car payments by about $1,300 a year.
e following considerations can help you determine whether re nancing your auto loan is the right step for you.
• Interest rates: Can you reduce your monthly costs by lowering your rate? Compare your current interest rate to those advertised. Keep in mind that there are several aspects of your nancial history that may have impacted your interest rate
for a loan, including credit score and credit history. If your credit score has signi - cantly increased since you nanced your vehicle, it may be time to re nance to a lower interest rate.
• Tight monthly budgets: If you need
to make some room in your budget due
to changing life circumstances or simply have a desire to sock more money away into savings, re nancing your auto loan is a move that may have a substantial impact on your nances. For example, those who have re nanced their vehicles through Clearlane, Ally’s online auto nancing platform, have reduced their monthly payments by an average of $112.
• Reducing the term: Another reason many choose to re nance is to reduce the number of payments they will have to make, with the goal of reducing the total amount of interest paid over the course of the loan. is may appeal to you if you can now a ord a higher monthly payment than when you purchased your vehicle, thanks to a raise or new stream of income.
If you choose to re nance, be sure to review your loan agreement and terms to make sure you understand your current loan. You should also be aware of any costs that could be incurred by re nancing or changing the terms of your loan.
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