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Banking and Finance  » Refinancing Your Auto Loan Can Save You Money

Refinancing Your Auto Loan Can Save You Money

Record Low Interest Rates Makes It A Great Time For Auto Loan

Refinancing!

It is no wonder that auto loan refinancing has suddenly become a

hot topic of conversation. Record low interest rates generally

leads to record high refinancing. However, when many people

think about loan refinancing for a lower interest rate, they

only think of their home mortgage loan.

While your home mortgage loan is the largest debt you will ever

carry, and refinancing it to a lower interest rate will

undoubtedly save you the most amount of money, this does not

mean that it might not also be a good idea to refinance your

auto loan.

Today's automobiles are not cheap; therefore auto loans today

are usually large enough to make it worthwhile to consider auto

loan refinancing. The average auto loan taken in America today

is $20,000. Refinancing a loan of that size to a lower interest

rate can save you a sizeable amount of money paid out in

interest.

At the end of the year 2000, the average interest rate on auto

loans was 9.25%. If you took a $20,000 auto loan at 9.25%

interest and refinanced it with a new loan at today's rate of

6.9%, you will save $1,500 over the life of the auto loan.

That's a huge savings!

One of the reasons that consumers don't think of refinancing

their auto loan is because they are usually short term loans.

The American economy, and the interest rate being offered, is

not usually volatile enough to change much during the life of an

auto loan.

However, more expensive autos, and larger auto loans, usually

means longer terms to the loan as well. The longer term,

combined with the current volatile market in America, means that

more consumers will be holding an auto loan during a period when

interest rates have decreased enough to make refinancing your

auto loan a great choice.

Chances are good that if you have been holding your auto loan

for more than a year, you might be able to refinance the loan to

a lower rate, saving you money on your monthly payments, as well

as lowering the total amount you will have paid for the auto by

the time the loan is paid off in full.

Whether you are considering refinancing your home mortgage or

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your auto loan, it is important to realize that refinancing is

never free. Therefore, you must always compare the costs of

refinancing against the savings you will realize from the lower

interest rate.

When refinancing a home mortgage, there are a lot of costs that

have to be factored in. While refinancing an auto loan is not as

costly, there are still some costs to keep in mind.

When getting quotes from lenders on auto loan refinancing, be

sure that the quote also includes any lenders fees and costs. In

short, it's important to have all of the information before

determining if auto loan refinancing is the right choice for

you.

About the author:

Mike Cotter has been a professional lender for over 30 years. He

began his career in the commercial banking industry in 1972 and

steadily progressed to become Vice President of Retail Banking

with a major Denver bank. In 1982 he opened his own commercial

bank and served as President and CEO for 10 years. In 1992 he

left commercial banking for the mortgage banking field. Rocky Mountain

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