Free Articles  >>  Business And Finance >>  Page 1632  >> 

Disadvantages of Refinancing a Car Loan 5 Situations When Not to Refinance Your Car

Just as you can with a home mortgage, you could potentially stand to benefit from refinancing your car loan. However, it is important to know the potential disadvantages in doing so.

Refinancing your car loan simply means taking out a new loan with different loan terms (e.g., repayment period, interest rate, and sometimes your choice of lender). The cash from your new loan will be used pay off your old loan, and depending on your situation may also give you some cash in pocket to be used for whatever you might need it for.
There are actually a number of very good reasons for refinancing an auto loan. The number one reason is to lower your monthly payments, either through extending the loan period, paying a lower interest rate, or both.
Other reasons can include lowering the overall cost of the loan (by getting you a lower interest rate or by shortening the repayment period - which would actually drive up your monthly payment amount but make the loan less costly).

However, there are some disadvantages of refinancing a car loan. Here are 5 situations when you should probably not refinance your car:

1. You have a very low interest rate on your current loan:

It makes the most sense to refinance when you believe you can qualify for a lower interest on the new loan than you were able to get when you closed on your existing loan; if you believe that this will not be possible, it may make sense not to refinance.

Remember, though, that you can also opt to change the repayment period through a refinance loan, which may make sense for you (see above) even if you cannot qualify for a lower interest rate.

2. You have very little time left on your loan:

If you have less than a 18-24 months left in payments on your current loan, refinancing may not make financial sense. The money that you stand to save in interest in this case may not make it worth it for you to go through a refinance.

3. You plan to sell the car within the next year or two:

If you believe you will be selling your car sometime soon, a refinance probably does not make sense. Similar to the situation above (#2), you will probably not realize enough interest savings to make the whole thing make worthwhile.

4. You owe less than $7,000 on your car:

Most credit unions, banks and other lenders will not consider offering you an auto refinance if you owe less than $7,000 on your car. This is because they do not stand to make very much money on the deal, given the low loan amount.

5. You bought your current car new:

New car loans generally have lower interest rates than do used cars. Now that your car is used, it may actually be harder for you to qualify for a refinance loan with a lower interest rate than you got when you bought it new.

Unless one or more of the above apply to you, it may make sense for you to refinance. Doing so could potentially get you into lower interest payments, save you money over the life of the loan, or both.
About Author Susan Willis :

Get a list of the lowest rate car financing lenders in your area at: <a href="" target="_blank"></a> Best Car Financing Deals.

Article Source:
Article Url:

Article Added on Saturday, February 4, 2012
Other Articles by Susan Willis

Best Mortgage Refinance Interest Rates 5 Tips
Having a home mortgage represents a huge achievement, one that not everybody sees in their lifetime: that fact that you are a homeowner. It is a wonderful feeling to own a home. Well, technically the bank still owns it until you pay off your mortgage. Your goal should be to pay off your mortgage as quickly as you can, while paying as little interest as possible in the process. Makes logical sense, right? But, if that is true, why do so many homeowners wait so long before they decide to...

Should You Refinance After a Mortgage Purchase 5 FAQs
Owning a home is and should be a major source of pride for anybody who has attained this accomplishment. Only a small percentage of people in the world own modern, free-standing homes of their own. Of course, the only real downside to having a home is paying the mortgage each month. Mortgage payments are a fact of life for all but the few homeowners who have completely paid off their home mortgages. For the rest of us, we will probably be stuck making payments for some time to come after a...

First Time Home Buyers Can Refinance Home Loans 5 Ideas
As a first-time home buyer, your home is one of your most valuable assets. And, no doubt buying your home was the most important financial decision you ever made. At the time that you took out your mortgage loan, you were able to qualify for a certain interest rate. The rate for which you qualified was determined in large part by your FICO, or credit, score at that time. Now, if more than a year or so has passed since you took out your loan, one of two things may have happened: a. average...

Refinancing Your Auto Loan After Bankruptcy 5 Auto Refinance Tips
Declaring bankruptcy was probably never something you had ever thought you would have to go through when you first become an adult. And yet, here you are. While it can feel like the end of your financial life, it doesn't have to be. You just need to learn how to live under a new set of financial rules that do not apply to people who have never filed for bankruptcy themselves. Some of the common difficulties that come with personal bankruptcy include the inability to qualify for new credit...

Consolidation Loan Refinance a Student Loan
Having to make payments can really eat into any extra money you have left over each month after paying all of your other living expenses. Sure, you are required to pay them back. But you also have to be able to afford your regular expenses that allow you to maintain a roof over your head, eat, buy gasoline and even pay for the occasional doctor's visit. Most college and graduate school grads carry $10,000s in loans, with many carrying well over one hundred thousand dollars in debt. And, many...

Mobile Home Refinancing Loan 5 Tips For How to Get Funded With the Best Interest Rate
Owning a mobile home is a pleasure for a number of reasons, not the least of which is that it represents a solid investment. Provided that a person plans to own their mobile home for a number of years, buying one is an investment not only in the physical comfort and safety of one's family - but also in one's financial future. For the homeowner who chooses to hold onto their mobile home for a number of years, they will stick with making the same mortgage payments month in and month out....

Best Credit Union Rates For Auto Refinance 5 Steps to Getting the Best Rate
If you own a car, you have probably heard that refinancing may be an option for you to save money on your monthly payments. And this is absolutely true, under certain conditions. The best time to refinance your auto loan is when one or more of the following is true: a. average auto loan interest rates are down relative to those of the past few years b. your credit score has improved over the past few years since taking out your current loan c. you want to refinance your loan over a longer time...

Car Refinancing Rates 5 Suggestions For Landing the Best Rate
When you first buy a car, it is easy to take for granted that you got the best-possible deal on your loan. This is especially true if you bought your car from an auto dealer. It is well-known that auto dealers use a combination of tactics to give themselves the best-possible deal while making you (the buyer) feel that you, too, came out ahead. For example, an auto dealer can play with a few different variables when putting together a deal for you. These variables include the price of the car,...

Which is Better A Home Equity Loan Or an Equity Line of Credit 5 FAQs
When you need cash, borrowing against your home can be a smart way to go. Since this is a form of collateralized loan, your bank can afford to offer you the loan at a lower interest rate than with most unsecured loans. This is because your bank knows that, if you were to default on the loan, they would be eligible to claim part of the proceeds on any sale of the home. Equity loans are smart money because the interest rates for getting access to cash via this type of loan are on average much...

Mobile Home Equity Loan But With Bad Credit 5 Tips to Get the Lowest Rate
When you own a mobile home, you get to enjoy the pride of ownership that comes from having your own home. At the same time, you can appreciate the investment you are making in your future. Sometimes, you need to borrow against the equity in your mobile home in order to get the cash you need. If you are looking for a mobile home equity loan but with bad credit, here are 5 tips to get yourself the lowest rate: 1. Understand that a mobile equity loan is also known as a second mortgage: A mobile...

Click here to see More Articles by Susan Willis
Publishers / Webmasters
Article ID: 340721
DELINK URL from Authors Bio
REMOVE Article
Tell A Friend
Leave A Comment!
Download this article in PDF
Report Article!
Search through all the articles:

252 Users Online!!
Related Articles:
Latest Articles:
Business And Finance >> Top 50 Articles on Business And Finance
Category - >
Advertising Advice Affiliate Programs Automobiles
Be Your Own Mentor Careers Communication Consumers
CopyWriting Crime Domain Names DoT com Entrepreneur Corner
Ebooks Ecommerce Education Email
Entertainment Environment Family Finance And Business
Food & Drink Gardening Health & Fitness Hobbies
Home Business Home Improvement Humour House Holds
Internet And Computers Kiddos and Teens Legal Matters Mail Order
Management Marketing Marriage MetaPhysical
Motivational MultiMedia Multi Level Marketing NewsLetters
Pets Psychology Religion Parenting
Politics Sales Science Search Engine Optimization
Site Promotion Sports Technology Travel
Web Development Web Hosting WeightLoss Women's Corner
Writing Miscellaneous Articles Real Estate Arts And Crafts

Disclaimer: The information presented and opinions expressed in the articles are those of the authors
and do not necessarily represent the views of and/or its owners.

Copyright AwareINDIA. All rights reserved || Privacy Policy || Terms Of Use || Author Guidelines || Free Articles
FAQs Link To Us || Submit An Article || Free Downloads|| Contact Us || Site Map  || Advertise with Us ||
Click here for Special webhosting packages for visitors of this website only!
Vastu Shastra

Virtual Linux Server Hosting Provided By AwareIndia

Company IDS