we got a used auto and financed through the dealership and the interest rate is extremely high. Should i refinance this loan or take a loan from my bank with a lower interest rate and pay off my vehicle and just pay the bank back.
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Auto loans are difficult to refinance because you will almost never have equity in a car. If you are one of those luck people that has a car that is worth more than what you owe, it can be done but keep in mind you will pay some fees which may be more than what you would save in the long run. If you have equity in your house (if you own one) you could take out a “home equity line of credit” or refinance your home to get a little money, home interest rates are still relatively low if you have a good credit score (720+). If you don’t have a home, you can try to get a loan from a bank for the amount you need but you typically need “double collateral” ie. if you want a loan for $20k you would need at least something/s worth $40k
Good Luck!
if you get the money from your bank you are still financing the car, just now through them. but the big question is why is you interest rate so high? and what is “extremely high” is it 20% or is it 8-9% people have a perception that every car can get 0% (not saying you) but there are people that belive they can get 0% on any car.
here are a few good ideas.
1 if you are getting the money on a home equity loan and its less than the rate you are paying now.
2. if you are refinancing against the car and the rate is lower than you are paying now.
3. dont pay your loan off now, you would be paying off a depriciating asset.(cash from a savings or any type of account that earns interest) actually cost more in the long run than any interest rate.
before you do any of the above see what your bank is offering and also see the term i.e. 36 months verses whatever you term is now. and see if they can beat it. if they beat it by .50 or under its still not worth it.
i hope that helped and good luck.
i have to add this, first you dont need a 720+ credit score to refinance a car, you can be between 620 and up and as far as using an equity loan from your house, its a good idea as long as you financing at least $10000.00 because then you can wright off you interest and acctually pay yourself back the interest(see an accountant for the details on that) and i wouldnt put too much credit on someone with little or no experience in the field of auto loans.
again good luck.
Take another bank loan with little interest and firstly finish off the auto loan as fast as you could
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