Money Matters: When to refinance your car loan

June 23, 2017 01:30

Sponsored by NEFE

Homeowners frequently see offers from competing institutions, encouraging them to refinance their mortgage and take advantage of better interest rates. But a home loan isn't the only kind of loan that might be worth refinancing. For many consumers, an automobile is one of the biggest purchases they make, so reviewing the cost of the loan could save significant money. If the vehicle is more than seven years old or if it is worth less than the outstanding loan balance, refinancing may not be possible, but for newer vehicles, it may be worth considering.

As shows, there are several situations in which refinancing could help, such as when interest rates have dropped from the time you made the original purchase, if your credit score has improved, if you didn't get the best deal at the beginning, or if spreading out payments over a longer term is needed. Because of the way the payments are structured, savings will be greater earlier in the life of the loan. It's also important to check whether you face a penalty for paying off your existing loan early.
To help your readers/listeners/viewers learn more about whether auto loan refinancing may be a good option for them, talk with banks and credit unions in your area about the programs they offer. Compare available rates, remember to include any fees, and do the math to show how a much a lower rate could save on a sample loan.

Sponsored by the National Endowment for Financial Education
For more personal finance story ideas, click on the banner below:

Steve Noviello of KDFW-TV entered the 2016 NEFE/RTDNA awards contest with his story about having his identity stolen, and confronting the alleged thief in person.