May 22nd, 2008 by RJ Menezes
When talking about refinancing, seldom do we hear about anything other than mortgages. Lesser known is the sizable sums of money that auto refinancing can save under the right conditions. Ed Powell, chief consumer officer at LendingTree.com, says that it’s important to remember that consumers still have good opportunities to improve their auto loan terms via refinancing.
It’s important to understand that refinancing isn’t for everyone though. For those who bought a car within the last couple years and got a promotional loan with 0, 1.9, or 2.9 percent financing through the automaker have little incentive to refinance. On the other hand, if you financed your vehicle at a rate of 7 percent or higher, this could be just the thing your looking for. Refinancing may not reduce your monthly payment drastically, but total interest savings may reach into $1000 or more over the life of the loan. Also, if you previously had bad credit at the time of the loan and have improved your credit since, refinancing could save you even more money.
If you are looking to refinance your auto loan, keep these tips in mind:
– Shop around for the best lender, including online.
– If you are approved, pay off your old loan right away.
– If extending the term length, take into consideration that though it may lower your monthly rate, it may also keep you from getting your next car when you want or need it.
– Home equity option: Because of their tax breaks and long time pay-off structure, home equity loans can be a good refinancing option.
– Beware of balloon payments: Be doubly cautious when using home equity loans and make sure you evaluate all the terms of the loan.
– Avoid prepayment penalties: These are increasingly rare, but if you are penalized it may nullify the advantage of refinancing.
It may all seem like a big endeavor, but under the right conditions, and with proper research and planning, refinancing your auto loan could be just what your looking for. Whether it takes the tight squeeze out of your monthly expenses or saves you some money in the long run, it’s certainly an option worth looking into.
Protect your vehicle with an extended warranty! Get a fast free quote on affordable extended warranties for used and new cars here! 
Don't forget to factor insurance costs into your research. Get accurate insurance rate information on any vehicle and shop for the best deal.
Get real price quotes from local dealerships. Don't buy a car without checking the price first! Pit dealers against each other to get the best deal possible!
{/literal}