Refinancing made simple

Getting your finances in order can be stressful, but it doesn’t have to be. There are simple steps you can take to prevent or cure a financial letdown. One of the options you can take to get back on track, and stay there, is by refinancing your auto loan. Here’s how the process works.

Much like when you refinance a home mortgage, refinancing your auto loan pays off your existing vehicle loan. But it’s much faster and simpler to refinance the loan on your car or truck. During the process, your new lender pays off your old loan and the title to your vehicle is transferred to your new lender.

Refinancing your auto loan can lower your interest rate, decrease your monthly payment by changing your terms, or both. Most often, people refinance when interest rates are low to reduce the amount of interest they’re responsible to pay. You can also lower your monthly payments by extending the duration of your auto loan to break your payments up over a longer time frame.

You could potentially enjoy significant savings by refinancing your vehicle loan. Exactly how much you’ll save depends on the remaining balance of your current loan, the difference between your old and the new interest rates, and the terms of your new loan.

No matter what motivates you to do it, refinancing your vehicle loan is an option that’s well worth your time and effort. A little extra research now could blossom into huge savings over the remaining months or years of your auto loan.


Factors to consider when refinancing

With mortgage interest rates being so low, more and more people are refinancing for obvious reasons.

When considering whether to refinance your mortgage there are many factors to consider, with obvious ones being the interest rate and the type of mortgage.

But there are many more factors to consider, including these from a helpful list compiled on Yahoo! Homes:

How long will I be in my home? The general rule is that unless you are planning to stay in your home at least another five years, then refinancing may not make sense. This is because a refi usually carries closing costs and the costs could outweigh the benefits. You usually “break even” at the five-year mark, which means you have paid for the costs to refinance.

Is there a prepayment penalty on my current mortgage? Since many mortgages carry a penalty if you pay off your existing mortgage, find out if you will be charged a “prepayment penalty.” The amount varies, but it can add up to several months’ worth of interest payments. Ask your lender.

What are the costs of the new mortgage? Lenders almost always charge fees for taking out a new loan. These can add up to an average of $5,000 to $10,000, depending on the size of the loan. Charges include application fees, appraisal, origination and insurance fees, plus title search, insurance and legal costs. Unless your new rate is at least a half a percentage point lower than your current rate, the fees may eat up your potential savings.

Will my tax savings be reduced? If you claim mortgage interest on your tax return, refinancing to a lower rate will mean that you’ll have less mortgage interest to deduct. That means you might have to check with your tax advisor to see if your overall savings will be increased if you refinance.

Check out the entire list so you can properly evaluate whether to move forward.