Do you ever wonder whether the financial benefits of refinancing your auto loan are worth it? For many people, the savings could equal to several thousands of dollars a year. For example, on average, consumers who use MoneyAisle see a savings of $1,412 per year. If you're currently paying a high APR to finance your vehicle, it may be time to refinance that car loan.
Most of the time, an auto refinance helps consumers cut down their monthly payments as well as the total amount paid by aggressively slashing interest rates on the loan. Though you may not realize it, over the course of three or five years, those interest charges on high APR loans definitely add up.
Auto Refinance Savings
Reasons for needing to refinance your auto loan can stem from anything. Maybe you didn't negotiate your financing well when purchasing your car, or perhaps you have improved your credit score since your purchase and need a bad credit auto loan refinance. It doesn't matter how you got your rate. What's important is focusing on getting a new lower rate that helps you manage your finances better.
To better illustrate the potential savings from an auto refinance, here is a look at the five top selling cars from 2009 and how much their owners could save if they refinanced their loan terms. For the examples, we'll use a few MoneyAisle customer experiences to set the original loan and refinanced loan interest rates.
We'll base the loan terms on a five-year schedule with no down payment. To reduce confusion, the refinance amount will also reflect the five year schedule as if the consumer had refinanced immediately.
1. Ford F-Series
Base Price: $21,380
MoneyAisle Example: "This refinance is such a relief for me! My auto loan was my first loan, so I was paying a sky-high rate of 15.75 percent on it. I applied through MoneyAisle to California Coast Credit Union and guess what, I got a rate of 2.88 percent! That's the best thing that has happened to me this whole year!" -- Kinjal from San Diego, CA
Original Loan: Monthly payment for this auto loan would have been $517.08 and total interest paid would've been $9,645.06.
Refinanced Rate: The monthly payments for Kinjal's loan would be reduced to $383.03 and total interest paid would come out to only $1,601.89.
Total Savings: $8,043.17 over the full life of the loan.
2. Toyota Camry
Base Price: $20,180
MoneyAisle Example: "They cut my interest rate from 9% to 4.39%.......HOW IS THAT FOR DOING A GREAT JOB?" - Leilani from St. Louis, MO
Original Loan: With the old loan, Leilani would have to make payments of $418.90 each month and her total interest paid would be $4,954.22.
Refinanced Rate: If refinanced, the monthly payments would be cut to $375.21, with total interest more than halved to $2,332.46.
Total Savings: $2621.76 over the full life of the loan.
3. Chevrolet Silverado
Base Price: $20,850
MoneyAisle Example: "I refinanced my car loan through MoneyAisle and cut my rate from 16% to 7.25% without increasing my loan term length." - Lynnette from Boston, MA
Original Loan Terms: Monthly payments come out to $507.03 and total interest paid adds up to $9,571.89 over the life of the loan.
Refinanced Rate: Refinancing the loan cuts payments down to a more tolerable $415.32 per month and interest paid to a relatively reasonable $4,069.12.
Total Savings: $5,502.77 over the full life of the loan.
4. Toyota Corolla
Base Price: $15,450
MoneyAisle Example: "I was able to refinance my car loan and reduce my interest rate from 11.5% to only 3.55%! I will be saving several hundred of dollars in interest payments each year." - KA from Austin, TX
Original Loan Terms: Monthly payments come out to $339.79 a month for KA, who'd also be paying a total interest of $4,937.15 over the life of the loan.
Refinanced Rate: Adjusting the rate gets monthly payments down to a very friendly $281.41 and total interest paid to only $1,434.51.
Total Savings: $3,502.64 over the full life of the loan.
5. Honda Accord
Base Price: $21,055
MoneyAisle Example: "I refinanced my loan and brought my interest rate down from 16.99% to just over 4%. ... Needless to say, I couldn't be happier." - Bob from Medford, MA
Original Loan Terms: Under the original loan terms, Bob would have to make monthly payments of $523.16 and fork over an insane $10,334.47 just in interest. The interest payments alone could probably buy Bob a second car.
Refinanced Rate: With the new rate, monthly payments are slashed to $387.76 and total interest paid over the life of the loan is a much more reasonable $2,210.59
Total Savings: $8,123.88 over the full life of the loan.
So, by now you should get the point. Refinancing your auto loan is a great option to cut down on your monthly costs, and more importantly, save you thousands of dollars over the life of your loan. If you think your APR is too high on your auto loan, you should definitely consider refinancing it.
This guest post was written by Henry Truc from Go Banking Rates, a website that brings you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates.
4 comments:
It's good to know how much auto loan refinance could really save you. Thanks a lot for sharing.
auto finance
Thank you so much for sharing valuable information now I know what can I do if I try an auto loan. Will certainly visit your site more often now.
sugar
"If you're currently paying a high APR to finance your vehicle, it may be time to refinance that car loan."- Good idea. If you're in a pinch and find monthly obligations hard to pay, getting a refinance for your loan is a great idea.
auto finance
These figures are expected to look perfect on paper, but just to be sure though, make sure you read and understand the conditions of your auto loan provider before signing anything.
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