If you purchase a used car at a place where a wacky-waving-inflatable-arm-flailing-tube-man guards the entrance, you may have walked out with a loan interest rate as high as 18% due to a few dings on your not-so-perfect credit. Of course, that's okay! You have to start somewhere, right? But after a couple years of paying five hundred bucks a month, you may have improved your credit enough to re-finance your ride. That means you can walk into the lien holders establishment after checking your remaining term (time of loan) and balance (how much left that you owe), and get a lower monthly interest rate. Doing this can save you a significant chunk of change over the long run, while lowering your monthly payments at the same time.
"Say you bought a new car two years ago and there were a few dings on your credit. You might have been charged 9 percent on a five-year loan for a $23,000 car. Your payments are probably about $525 a month.
Now let's say your credit has improved, and so have interest rates on car loans. You could now refinance the balance of your car loan at 3 percent and lower your payments to about $445 a month for the remaining three years. That's a savings of $80 a month and $2,880 over the life of the loan."
There are plenty of lenders out there who don't mind offering re-financing services. Many people ask if there's a downside it. The short answer would be simply, "no". There are never any fees or penalties involved, so you can stop worrying about paying any more than what you already are. Here is a nifty auto loan calculator provided conveniently by Edmunds.com. Check it out and call us with any questions you may have at 408-246-1000. Thank you and have a great day!