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Should You Refinance Your Car Loan?

  • [아시아뉴스통신] Ian Maclang 기자
  • 송고시간 2018-02-28 18:48
  • 뉴스홈 > 국제
Photo by: DariuszSankowski via Pixabay
 

With the rising costs of owning a car, it can sometimes seem impossible to continue to afford it.Maybe you’ve imagined just selling it off just so you could have peaceful nights instead of the sleepless nights you spend thinking about how you’re going to afford paying for your car-related expenses.


Maybe you’ve even considered avoiding driving to save some gas money or carpooling so you can at least break even.But there are other, perhaps more efficient ways of cutting car-related costs and it involves one of the biggest cost-raising suspects in your car expenses: car loans.


When you first got your car, you might have had to settle for a higher-interest car loan because technically you were pretty much an inexperienced and high-risk driver in the eyes of the lender.Except you’re actually not.In fact, your good credit score might’ve been able to score lower interests for you.


Senior Research Analyst Delvin Davis from the Center of Responsible Lending explained that people usually have no idea that they could’ve qualified for lower interest rates than the seemingly-low rates offered to them.


Auto research website Edmunds.com’s Senior Consumer Advice Editor Philip Reed explained that this stems from a wrong assumption on the driver’s part that her credit score isn’t good, which then allows lenders to take advantage of their ignorance.


“Most people think their credit score is worse than it is,” Reed added. “When people don’t know their credit rating, the dealer can tell them almost anything.”


While you can’t exactly lobby for lower interest rates with your current lender now that you know that you deserved better, you can look for another lender who can help you refinance your car loan.


When you apply to refinance your loan, your new lender will pay off your existing loan so you can make payments to them instead.This is especially helpful if your new lender can offer you more manageable, lower interest rates.


Nerd Wallet Staff Writer Philip Reed has a warning, though: if you have to extend your loan term to qualify for refinancing, you might want to think it over.Longer loan terms definitely mean that you’ll be paying more in interest than you originally would have.Although if the choice is between that or damaging your credit because of missed payments, the choice seems clear enough.