The most important factor when it comes to refinancing a car is the annual percentage rate (APR) or interest rate. The main advantage to refinancing is that a better rate can lower your monthly payments and the overall loan amount. There are various factors that can affect the APR, and among these are your vehicle’s type and age.
Interest Rates Are Similar To Insurance Rates
In some ways, refinancing rates are similar to insurance rates. This is because both insurance and refinancing are largely based on the value of your car.
When you go shopping for car insurance, the insurance companies base their premiums on specific data about you and your car. When you go shopping for car refinancing, potential lenders also use information to make decisions about interest rates.
APRs are determined by:
- Vehicle year, make, model and style
- The state you live in
- Your credit score
- Total loan amount
- Original loan details
- Included fees
As you can see, the car’s value makes a difference in how much interest a lender will charge Also, the lower the risk is the lower the rate will be. This means that newer cars often enjoy rate advantages.
One of the best ways to find great rates is through an auto refinance network, like CARCHEX. These types of services are able to compare nearly one hundred different lenders to find you the best APR. Even if your interest rate only goes down by 1%, it may be worth refinancing in terms of total dollar savings.
Know What Your Car Is Worth
When you decide to refinance your car or truck loan, it helps to find out the current value of your vehicle. This value is affected by both the type of car and its age. If the value of your car is less than what you owe on your current loan, then finding refinancing might be difficult.
You can find your car’s value at Kelley Blue Book. You can then call your current lender to find out what you owe on your car loan. If the amount of the loan is less than the value, then it might be a good time to look into refinancing. In any case, checking with auto finance networks, like CARCHEX, makes this process faster and easier.
More About Interest Rates
The APR is based on the US Prime Rate which is the best rate that large commercial banks charge to the most creditworthy customers. Prime loans are made to the borrowers with the best credit and lowest risk. Sub-prime loans are for higher risk borrowers, so these loans carry a higher interest rate. Even if you need to take out a sub-prime loan, you still may be able to save money. Shopping around through auto refinance networks, like CARCHEX, can often find sub-prime loans for auto refinancing.
Many factors go into determining car loan refinance rates. Car type and age are two important elements that are considered.
Want To Know More?
Interested in refinancing options for your car or truck loan? Then visit CARCHEX and let us find a better loan deal for you on an existing vehicle loan. Or call toll free 877-CARCHEX now.
Published in CARCHEX Auto Finance Resources by CARCHEX on November 12, 2014