Refinancing Your Auto Loan: Who Knew?

Moving can sometimes increase your monthly expenses to obscene levels, especially when moving to a city with a higher cost of living. From a small increase in your utility and grocery bills to a substantial rent or mortgage increase, a recent move can often times boost your monthly expenditures much more than you anticipated. So how do you deal with the surprise?

One simple way is to reduce one of your biggest monthly expenditures—your auto loan. Once thought to be limited to only mortgages, auto loan refinancing has become a hot commodity for online users who want to pay less on their car loan. "One of the best-kept secrets today is auto refinancing via the Internet," said Brian Reed, president of
PeopleFirst.com, a subsidiary of Capital One and the nation’s largest online vehicle lender. "There are no fees associated with auto refinancing, so all it takes is the time to fill out the application."

An alternative to using traditional providers such as banks and credit unions, refinancing your auto loan online can be a valuable investment of time that could lower your monthly payment as well as save you a bundle over the life of your loan. According to Forrester Research (FY2000), 70 percent of those who research auto loans online do so because it’s easy to comparison shop. And two-thirds of those who have applied say
they go online because it’s more convenient than on the phone or in person.

Many car owners are simply not aware of the low refinance rates available online. What they also may not realize is that refinancing an auto loan can be easier than refinancing a home and save you serious money. For instance, a $30,000 auto loan for five years at eight percent APR would result in a monthly payment of $608. If after one year, you refinance at six percent APR, your payment then drops to $587 a month, saving you more than $1000 over the life of your loan. Bottom line—if you find an interest rate online that is lower than your current interest rate, you are going to save money.

Today, more and more savvy consumers are recognizing the savings that can be earned by refinancing their auto loan online. The Internet has become a great way for car buyers to apply for low-interest loans with no down payment, no application fee, and no prepayment penalty—all from the comfort of their home or office. If you’re looking for an easy way to save money and willing to invest 10 minutes, take the time to stay around and find an auto loan provider in your area.

Finally, and perhaps the most important of debt reduction strategies, develop a specific monthly budget for you and/or your family. This plan should address a plan of action that eliminates spending on unnecessary goods and services. This might include foregoing those Friday night pizzas, a few drinks at the bar, your premium cable package - or even that morning cup of java. Developing a clear picture of your financial situation will help pinpoint the areas where debt can be reduced, and with it, the financial stress in your life.

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