Who should refinance a car?

Not all car owners bother to refinance their cars but there are, in general, three types of consumers that seek refinancing. See if you fall under any of the following:

1. The price-conscious buyer

This consumer is always on the lookout on how she can save on purchases or financial deals. She constantly monitors interest rate indicators like the Federal Reserve.

As soon as market rates drop, you can expect this type of consumer to shop around for better car loan rates. This consumer is also more likely to look for refinancing when his credit rating improves so she can obtain lower interest rates.

2. The remorseful car owner

This consumer may have recently bought his new vehicle through dealer financing. When he realizes that the dealer marked up his financing costs, he would certainly want to refinance to get over his remorse.

3. The budget-conscious car owner

This consumer may have purchased his auto on a short-term loan because he wanted to pay it off early despite the high payments, which he can afford anyway.

If he decides to make another large purchase that would disrupt his earlier budget provisions, a new house for example, the sensible thing for him to do is to get refinancing for his car so he can extend the term, lower his monthly payments and free up some cash.

Recommended resource: Auto loan rates