In today’s world, almost everyone is on the lookout for ways to save extra money. Home-owners are always interested in seeking out the lowest interest rates, as refinancing their loan can put hundreds of extra dollars in their pocket on a monthly basis. The same principle can be applied to an auto loan, and there are several key benefits to refinancing with a direct lender.
Save significant amounts of money each month
Many people are forced into financing at a very high interest rate because of poor credit. When one needs transportation expediently, especially because a vehicle is required to get to work, it is easy to push aside the worry about the high interest payments. If someone gets an auto loan at an interest rate of 20% or higher, they can save over $100 per month by finding a rate that is 7% to 10%. Lending is a highly-competitive business and interest-rates can be negotiated. Also, if the original financing was procured because of a new job, after a few months a credit-score can be improved. It never hurts to shop around if one is paying a high interest-rate.
Speed counts
Unlike with homes, a car does not need to be appraised when considering refinancing. This fact alone can save those shopping for a car loan valuable time. Also, most direct lenders offer online applications that can be filled out in just minutes, and if qualified, one can see approval in a matter of hours. This makes it possible to see money immediately, and this can provide peace of mind during tough financial times.
There are other reasons to consider refinancing an auto loan, but most are simply a matter of getting the best value for the money. Take advantage of all the competition in the loan industry and shop around until you find a reasonable interest rate. It is understandable to acquire high-interest financing when one needs a car immediately, but after the dust settles, it is time to seek out a better value. It never hurts to try, and it is very possible to save a significant amount of money on a monthly basis.
By: Hector Milla
Posts Tagged ‘Principle’
Auto Refinance Loans – Benefits of Refinancing With Direct Lenders
December 10th, 2009Refinance Your RV Loan and Save Thousands
November 15th, 2009
How much can I save by refinancing my existing RV loan?
The answer to this question depends upon several factors. It would depend on how much you could reduce your interest rate. It would also depend on your unpaid loan balance. You would need to weigh the potential savings against the closing costs… if any.
For example: If a loan with $50,000 remaining to be paid at 8.5% interest could be refinanced at 6.25%, you could save over $11,400 in finance charges over the term of a 15 year loan. You could also choose to lower your payments, or lower your repayment term. The choice is yours, but in the case of RV refinancing, there are usually very minimal closing costs. This means that virtually any savings in interest rate make refinancing a smart move.
What’s your percentage rate?
Finance is a tricky business that can help you save thousands of dollars, or can sneak up and bite you in the behind. There is more to consider than interest rate and payments when financing any type of vehicle, although these are the two things that people usually focus on.
The first factor to consider is obviously interest rate. The savings of even a quarter to a half percent in interest rate can translate into thousands of dollars over the course of the loan. This will be one aspect of comparison between your dealer’s F & I department and alternate sources of financing that are currently available.
The second aspect you must consider is term. In other words, how long will they finance the loan. This will directly effect your monthly payment amount. You should normally choose a long enough term to provide a comfortable payment, but not so long as to severely limit the amount of principle included in your payment.
Dealership vs. Bank Financing
Most banks are set up primarily to finance automotive loans with maximum terms of only 5 to 6 years. Because of constantly rising car prices, some banks and credit unions are now offering longer terms. Rarely however, will they go any longer than 7 years. Even if you are financing an RV, the same terms will apply. This can make for an extremely high payment.
This is where the RV dealer has an advantage. RV dealers are set up with lenders who finance recreational vehicles on a daily basis. In order to fit the payments into your budget, you can easily finance for 10, 15 or even 20 years. This can mean the difference between an affordable payment – and one that is difficult if not impossible.
Alternate Sources of Financing
With the emergence of the Internet, many specialized financing companies have gained prominence. Most of these companies specialize in recreational vehicle financing. This not only includes RV, but also boats, aircraft and other higher priced items.
The primary benefit of using a specialized recreational vehicle finance company is that you will nearly always secure a much lower interest rate. In many cases we have seen a savings of 1% to 2% over the financing rate offered by the RV dealer’s finance department, or even the customer’s local bank or credit union.
When using a specialized finance company, you should allow for a 5 to 7 day processing and funding period. Applications are normally taken by secure form on the Internet, with supporting documentation usually handled by fax. You will be required to provide a recent pay stub and your last 2 years W-2 forms from your tax returns. If you are self-employed or retired, you may be required to provide tax returns or proof of retirement income.
Remember, if you are purchasing or refinancing an RV you should always investigate your financing options to secure your best interest rate and terms. Even though specialized recreational vehicle financing take a little longer to process, it’s usually well worth the wait. Don’t let your impatience end up costing you thousands of dollars in finance charges.
By: Barry Wilder
Interest Only Vs Traditional Refinancing Loans
November 6th, 2009
If you are thinking about refinancing your home, two types of refinancing loans you should look into are Interest Only and Traditional Refinancing Loans. Here are some tips.
Traditional Refinancing Loans
The most common type of refinancing loan is the traditional loan. A refinancing loan is a new loan that replaces an older loan, using the same property as collateral. Refinancing your home mortgage will completely revamp it giving it a new monthly payment, payment terms and length of the loan. The most beneficial aspect of traditional refinancing loans is that they usually have low fixed interest rates.
Many homeowners can purchase homes at times when lenders only close on mortgages with high interest rates, by refinancing your loan, you can lower your interest rate and ultimately pay less per month for your mortgage. Traditional refinancing loans are extremely similar to primary mortgage loans and are considered very conservative loans that have limited risk to the lender. Because of the reduced risk, interest rates for traditional refinancing loans are usually the lowest.
Interest Only Refinancing Loans
An interest only refinancing loan gives the homeowner the option of paying a lowered monthly mortgage payment. A traditional refinancing loan combines the principle of the loan with the interest part of the loan in each monthly payment; however an interest only refinancing loan gives the homeowner the option of just paying the interest amount and deferring the principle until a later date.
It is important to note that financially savvy homeowners can take advantage of these lowered monthly payments. While it is not a good idea in general to only pay the interest of your loan just to lower your payment, for certain homeowners, paying only the interest increases cash flow for other uses. For instance, you might want to take that money and invest it into a 401K, pay for a child’s tuition or use it for Christmas gifts. Interest only refinancing loans give you the added option of doing more with your monthly mortgage payments.
It should be noted that most interest only refinancing loans only give you the option to defer the principle for a set term, for example the first 10 years of the loan.
If you are thinking about refinancing your home, make sure you look into the many different refinancing loan products available from your lender. It is important to carefully consider each product to determine which one best fits your needs.
By: Connie Barker