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
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
Mortgage Rates
