Why You Should Consider a Vehicle Refinance When Trying to Reduce Your Debt
With all of the news about low mortgage rates and the benefits of refinancing your home loan, auto loans get little attention. This is too bad because your car loan can be a financial liability as well as a potential solution to many of your money problems.
Just like banks want to limit foreclosures on home, they also want to minimize the number of automobiles they have to repossess. No bank wants to send the repo man to your house, so if you are in trouble and don’t own a home, or aren’t ready to refinance your mortgage, consider using your car loan as a starting place for gaining financial control.
Call your lender and talk to a representative about the details of your loan. Find out how many payments you have left, the total amount you still own and the current value of your automobile. Once you have this information you are ready to begin the process of refinancing your loan.
If you are trying to improve cash flow, you can renegotiate the terms of your existing loan and add another year or two or monthly payments to lessen your monthly bill. While this won’t lower your overall debt, it will allow you to keep your car, which will, of course, help you to get to work and fulfill your commitments. This will also protect your credit score as you will be less likely to have late payments and missed payments.
If you are looking to get a better interest rate call your lender and let them know that you think you can do better. These companies want your business and will go out of their way to keep you as a customer. If you have good payment history and are happy with your lender then this is a good and easy option. Decreasing your overall loan amount will save you hundreds of dollars off the life of your loan, even if you don’t see it month to month.
Finally, if you have paid off your car and own it outright you can use your car as collateral to obtain a new car loan. Auto dealers want people to buy cars so they are offering crazy good loan packages to potential customers. Ask for these good rates on a loan against your car. Depending on the age and condition of your car as well as the make and model, a new loan on an old car could put thousands of dollars into your hand for a higher interest debt payoff, or college or tax burdens.
If a home loan just seems too big for your current needs, look no further than you automobile!
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Alterfemego said on August 1, 2010
given the equity in your home is at 20% then yes you can re fi your loan. However, you may not need to pay the costs of the re fi by just going to the note holder and drop the mortgage ins.
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