Mar 24, 2021 / Auto & RV
Have you ever bought a new or used car, knowing it wasn’t going to get great gas mileage? Maybe you focused on the pros and looked past the cons. Or, maybe you just ignored the MPGs because you were so excited about your new purchase. Whatever the reason, after a few trips (per week) to the gas station, regret inevitably creeps in. Your car is great, but the extra expense is overwhelming.
This scenario isn’t isolated to fuel economy alone. It happens all the time with car loans too. You overlook the interest rate or expected monthly amounts, and after a few payments, regret creeps in. You get borrower’s remorse and your new car loan starts to taint the love you have for your new car. If your current car loan is a real cash guzzler, here are three scenarios when a refinance might make sense.
Despite what you may have heard, not every loan will come with an identical interest rate. In fact, if you financed your car purchase through the dealer’s preferred lender, there’s a great chance your preferences weren’t taken into account and you got a raw deal. Similarly, big bank interest rates are often as big as the institutions themselves. Check your billing statement for your current interest rate, then shop around for a rate that will make your current loan more affordable.
If your current monthly payment is feeling a little overwhelming based on your current budget, a refinance can make a lot of sense. In addition to saving you money with a lower interest rate, you may be able to lengthen your loan term, which will reduce your monthly payment obligation. Lengthening the term of your loan may mean that you owe more interest over time, but if it makes sense based on your current monthly income to expense ratio, a refinance can help lighten your financial load.
Different lenders assess risk differently. Some penalize borrowers with burdensome interest rates based on past credit problems or inability to repay loans. Other lenders are willing to give “high-risk borrowers” a second chance with lower interest rates and better overall loan deals. If bad credit made your last loan more expensive (and especially if your credit or financial situation has improved in recent months), find a lender that will approve you for a loan with a great interest rate. You’ll save money and likely lower your monthly payment.
If your current loan is a real cash guzzler, the right refinance can refuel your love for your car, rather than always leaving your wallet on empty. Check with the helpful loan specialists at Utah First, or apply online, to see if a refinance is right for you.