Finally, for each car loan you are comparing, find out the lock-in period, during which the interest rate and points quoted to you will be guaranteed. There are lock-in periods that range from 30, 45 to 60 days. Some lenders offer a lock-in for only a short period of time, say 15 days. When the lock-in period is longer, the price of the loan maybe be higher. The lock-in period should be long enough to allow for settlement before the lock-in period expires.
You can take advantage of lower car loan rates by refinancing your car loan. Refinancing a loan could put some extra cash in your pocket as well. If you financed a car within the last 18 months, you may be able to beat your former rate through a refinanced loan. Back then, you could have been so caught up in the excitement of buying a new car that you forgot to focus on the financing deal and instead, focused on its color and leather seats.
Think of it this way, if you apply for a refinanced car loan, you've got nothing to lose but only savings to gain and a credit check. It may be worth while to run a free credit report to get an idea of your scores and shop around for a good loan rate. A good car refinance company will be able to make a good judgement on your rate without running another credit check. Here are some easy tips to help you decide on refinancing your car loan or not:
First, ask yourself, what are you trying to accomplish by refinancing your debt? Are you looking for means to pay as little interest as possible? Would you rather have a different type of financing?
Second, think of your credit situation as a real scenario. Will your credit qualifications allow you to get the best refinancing deal? Try to get a copy of your credit report before applying for a refinance car loan.
Third, have a second look at the loan you're already signed. Try to determine how the rate on your current loan is calculated. With a simple-interest loan, interest is charged daily based on the balance due. If there is no prepayment penalty on your current car loan and you plan to keep the car for several years, then it makes sense to go after a lower interest rate.
Fourth, compare your current loan terms with the new car loan terms to determine whether or not you will have any real savings. Sometimes it just pays to add some more to your payments each month to lower your total cost.
It's important that you decide ahead of time what you will do with any new found monthly savings you would have from a refinanced loan. If you continue to send in the same amount as your original car loan payment, you'll double or perhaps triple the benefits of the refinanced loan because you are reducing the principle much more quickly. And this is suggested.
If you send only the required amount, you'll be paying less monthly but you won't be speeding up your debt reduction by paying off the principal sooner.
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