Car Refinance: Rates to Know

When looking at car refinance rates, there are several numbers you should know before you talk to a potential lender.

It is important to know your current interest rate so that you have a reference for comparison. Remember, with auto loans, the shorter the term of the loan, the lower the interest rate. However, the longer the term of the loan, the higher the interest rate. This basic foundational concept is extremely important to remember when considering an auto loan refinance.

Current interest rates will be based on your current credit rating and what current rates are for individuals with excellent credit. While there may some room for negotiation if you are willing to take a shorter term on your loan or you have good credit, remember that a refinance can be difficult when the age of your car is taken into consideration. Usually, as a car ages it goes down in value or depreciates. This means that you will likely have to find a way to come up with the difference between what you owe on your current car loan and the amount of your new auto refinance loan.

While this is not the same thing as interest rates, knowing your credit rating is extremely important because it is a major factor in what type of auto refinance loan you may be offered. Before talking to a potential lender, get a copy of your current credit report. If your credit rating has deteriorated since your original loan, make an effort to correct any errors or erroneous information that is on your credit report so that you can improve your credit rating.

It is definitely possible and easier than ever to find an auto refinance loan. However, before you talk to a potential lender, do your homework and gather your information so that you can make an informed decision.