While many people will typically consider refinancing their home loan in order to save money, often times individuals don’t actually think about the money saving potential that comes with refinancing their automobiles. As what’s often referred to as a person’s “second largest purchase” right behind their home, an auto loan can be a sizeable monthly payment that also has the potential to be lowered, if you know what to look for.
Below, Desert Schools Federal Credit Union offers three questions to consider that may point to saving money on your auto loan.
Have interest rates dropped? Check out the interest rates of different lenders in your area to see if rates have dropped since you purchased your vehicle. Look for rates at least one percent less than what you’re currently financed at. You’ll be surprised at how much you can lower your payment with just a one-percent difference.
Did you get the best rate when you purchased your vehicle? A great credit score and flawless credit history don't always guarantee you the best rate from a dealer. Take a quick look at your score and do some research on current rates to gauge whether or not you think you can get something lower.
Have your financial needs changed? If you’ve experienced a decrease in income or experienced a financial setback, reducing your monthly vehicle payments could be something to explore for the short term. By refinancing and increasing the term of the loan, you are able to lower your monthly payment. Make sure that when you are able to pay the regular amount again that you re-up the larger payment so as to not become “upside down” in your vehicle.