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When to Refinance Your Car.

In this economy, which is enduring a slow recovery, interest rates hit historic lows, but are once again beginning to slowly climb again. As this goes on, the word “refinance” is on many people’s lips. On down from mortgages to car loans, people are looking to grab up on the lower interest rates while they can. But what situations are the best for you to refinance your car? Let’s look at the top few.

Lower Interest Ratesrefinance your car

With interest rates down, you might find that the prime rate for your vehicle could be lower than the one you currently have. If you’re paying 6% interest, and you can get a 5% rate, you should go for it—you may be able to save a lot of money over the life of your loan. In fact, if your rate is currently 6%, you should absolutely investigate refinancing, as lower rates are available.

Improved Credit Score

If your credit score was not ideal when you first took out your loan, and you have taken steps to improve it, refinancing might be a great way to take advantage of your newly-risen score. If you purchased a car with credit problems, your interest rate was almost certainly sub-prime; refinancing can get you a lower rate, which can save you money in the short and long run.

Financial Hardship

If you’ve encountered a period of financial hardship and need to reduce your bills, but your credit rating hasn’t yet taken a major hit, go for a refinance. Again, grabbing a lower interest rate through refinancing your car loan can mean lower monthly payments, which could enable you to manage one or two more bills per month.

Expiring Car Lease

If you’ve been leasing a car, generally you have three options:

• Turn in the vehicle and walk away
• Turn in the vehicle and lease a new one
• Finance the vehicle’s remaining cost and buy it outright

If your car is in good shape, has been reliable, and you like it, you can find a lender that refinances the vehicle and get a good interest rate on buying the vehicle. The only risk in this case is that you still may be paying on the car loan after the vehicle’s warranty expires. But if you drive the car lightly and feel it to be reliable, refinancing your car can be a great approach to owning your formerly-leased vehicle.

Remember, refinancing your vehicle can save you hundreds or even thousands of dollars over the life of your loan. If the circumstances are right for you, investigate this as a strong option to lower your monthly payments and save money.

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