Home > Auto Loans > Keep Your Eye On Auto Loans For Refinancing Your Car
Keep Your Eye On Auto Loans For Refinancing Your Car |
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Loving your car if fine, but don't love the heavy interest rate of auto loans. Rather, consider opting for refinancing. Remember that even individuals having good credit end up paying high interest rates on auto loans. The reason being, they are so excited buying a new car that they neglect the details of the financing deal. It's only later, after the excitement has worn off, that they realize the exorbitant interest rate they've agreed to pay to the auto loans dealer. In such cases, refinancing might be a better option even one or two years into the original loan, especially if you've had credit problems in the past. Let's take an example: because of bad credit, you opted for auto loans with interest of 18% or more. If you've been stable in a job since the purchase and made timely repayments for a year or more, you might be eligible to get a lower interest rate. It's worth checking out. Bringing down a loan's interest rate even a percentage point or two can help you save hundreds of dollars in interest, as well as bring down your monthly payments. To get better interest rates on auto loans, first of all, study your existing loan deal thoroughly. Does your present loan charge prepayment penalties? Many of the firms charge a fee between $25 and $200 for prepayment. You also need to know that how is the interest rate on your present loan calculated? Remember that refinancing is the best option, and also helps you save the most, when auto loans having simple interest and no prepayment penalties are refinanced into simple interest auto loans with a lower rate. Be sure to check out all the refinancing deals available from local banks and credit unions. There are several small banks and credit unions that mail refinancing solicitations to recent consumers of auto loans. Such offers may start pouring in within a few weeks of your purchase. So, keep your eyes open! You can also search online for better offers. While shopping online, check out the fees of the auto loans before making your decision. The terms and conditions of such loans vary a lot; so don't be surprised by the terms of your loan. States charge between $4 and $40 for changing the name of the lender on a car's title. Some lenders take up that cost; others pass it on to the consumers, while some of them charge processing fees. Be sure to ask your lender what he's going to do. Most of the auto loans are simple interest loans. But before going for a better loan, ensure that your original loan is a simple interest loan. Several sub prime lenders offer pre-computed loans. Beware of such loans, as once you sign up for this type of loan, you'll have to pay back principal amount, as well as the full amount of interest that will accrue over the entire term of the loan. How would you know whether you've signed for pre-computed auto loans instead of simple interest auto loans? To find out, check the front page of a loan contract to see whether it allows a refund or rebate of interest. That's how you'll get to know whether the loan is a pre-computed loan. And chances are, a lender offering pre-computed auto loans would apply the Rule of 78s to all prepayments. Check out the back page of the contract and go through the section on prepayments for more details. Some contracts clearly mention the Rule of 78s. Avoid signing auto loans that apply the Rule of 78s to prepayments. But in case, if you've already signed, the best way out is to make your payments as scheduled. And the next time you go for auto loans, learn from the previous mistakes and get a good financing deal. Ensure that you sign up for a simple interest loan with no prepayment penalties. |
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