Is Refinancing a Car Expensive?
There are many misconceptions floating around the internet about auto refinance myths. Believing these misconceptions keep people from taking advantage of a service provided that may save them hundreds, if not thousands of dollars on their current high interest car loans.
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I want to clear the air about ten of the most common auto refinancing myths. Take the time to read through them and then decide if refinancing your car is the right choice. Refinancing a car loan can have great benefits to you financially. Do your own research before taking someone else’s word if you should refinance your vehicle. The truth is refinancing your car can get you out of paying a higher interest rate and lower your car payment.
FALSE – Although banks are being cautious with who they approve for loans, it’s very easy to see that interest rates are very low and auto refinance interest rates are at historical lows.
Banks cost of capital is very cheap right now. Banks, lending institutions and online auto lenders can borrow short term money at very low rates and still make money by offering long term loans with rates attractive to consumers. Refinancing your current car loan now will lock in a low interest rate before interest rates start to rise.
Read more tips and information on how to refinance your car here.
NOT APPLICABLE – Unlike your home, where the loan is based on your equity. When you apply for an auto refinance loan, you do not have to have your vehicle appraised.
You also don’t have to worry about paying for an on-site appraiser or dealing with a car dealership to get your vehicle appraised. Auto refinance lenders will use NADA, KBB or other books to value your current car based on the year, make, trim, features, mileage and vehicle identification number.
NOT TRUE – Comparison shopping is the best way to get the lowest price or best deals on anything your looking to purchase. What’s funny is most people will shop around for days for the best price on a new car but will pay whatever interest rate is offered to them.
A lot of people are under the misconception that rate shopping will hurt their credit score and decline their approvals for filling out several applications. Credit bureaus will count all of your credit pulls for seeking an auto loan in one month as just one pull. This means your score will not change very much and your overall goal is to get a better rate and save anyway. So get out there and shop.
Each bank has different algorithms when determining the credit risk of an individual. You may be approved by one bank to refinance your current loan for a 9% APR and the next bank you apply with may offer you a better APR of 4%. Don’t go crazy but definitely shop around and explore your options.
