| If you're pondering the question of refinancing | | | | - How much you still owe - If you've had your |
| your car there are a few things you need to | | | | car for a short time and you still owe a lot then |
| consider before moving forward. If you follow the | | | | refinancing might make sense. If you've only got |
| list below you will either save yourself a lot of | | | | a year to go on your payments and making them |
| money or a lot of grief. | | | | hurts but doesn't put you down for the count, |
| To determine whether or not you should | | | | you may just want to take the pain and finish out |
| refinance your car, factor in the following | | | | the loan you currently have. |
| variables: | | | | - Prepayment penalties - Is there a prepayment |
| - How long you've owned the car - If you've just | | | | penalty for paying off your current or (possible) |
| purchased your car within the last month or so, | | | | future loan early? If there's a prepayment penalty |
| and you've found a better financing deal at a | | | | on either one of these loans you'll want to weigh |
| credit union or online lender then by all means | | | | your options carefully before you proceed. A |
| refinance as long as the other criteria below do | | | | lower interest rate may not compensate for the |
| not throw a wrench into your gearbox (pun | | | | prepayment penalty you get stuck with. |
| intended). | | | | If there is no prepayment penalty on your |
| - Your current interest rate - If your current rate | | | | current loan, are you in a situation where you can |
| is less than desirable (you financed when rates | | | | pay even a little bit more than you currently do |
| were high) and rates have come down quite a bit | | | | each month? If you can afford to do this, and |
| then possibly consider refinancing, if all or most of | | | | there's no prepayment penalty then your current |
| the other variables are favorable. | | | | interest rate loses some of its significance, and |
| - Your new interest rate - If your credit score is | | | | you might be better off to just stay put and |
| good to great you should be able to get a low | | | | make larger payments.Let's face it, cars are |
| interest rate but keep in mind that if you've had | | | | money pits and there are people out there who |
| your car for any length of time it's now a "used | | | | will tell you it's not really a good idea to finance |
| car" and you won't get as good of rate on it as | | | | them once, let alone twice but there's this thing |
| you would if it were a new car. | | | | called life, and according to one commercial on TV |
| - Will your new rate be fixed or variable - A | | | | it "comes at you fast". If that's true (and it is) |
| variable rate will fluctuate with economic trends. | | | | then just think of (re)financing as a way of |
| What might start out as a low interest rate may | | | | "ducking for cover" when paying cash isn't an |
| not stay that way so be aware of that when | | | | option. |
| considering auto refinancing. | | | | |