Think of Refinancing
3. Think of Refinancing
If there's a drop in interest rates, car refinancing can make pretty much sense. Usually borrowers are more accustomed to home refinancing matter and may not know about the possibility of doing the same with their car loans. Still this option can reduce both your monthly repayments and interest rates that, in its turn, can reduce the term of your loan. Furthermore, since cars don't go up in price and, quite on the contrary, depreciate, you're more than interested in paying the loan off ASAP.
Let's make some calculations. A $16,500 loan with 21% interest (that high because of your poor credit score) will amount your monthly payment to $446 and total rate of interest on the loan to $10,300. In case of car refinancing the rate can lower up to 7%. This way your monthly payment will amount to $330 and total rate of interest on the loan - to $3,300. Extra sum paid per month will amount to $116. How can you spend this money? Right, you can pay off the loan quicker.