Refinancing your auto loan is a great option to take up if you have maintained a good credit score. Refinancing will bring down your monthly payments by a significant amount. But that is not the only reason why you should consider it.
1. Divorce – A divorce can be messy enough without a loan being thrown in to the mix. Whether you are about to get one, are in the middle of one or are past one it is best to get any and all joint loans out of the way. By refinancing, you can take your spouse’s name off the loan agreement. This is important because, if they fail to make any payment it is reflected on your credit score. Once you build up a bad score it is a tough task to correct it.
2. Family member – A family member (probably your dad) would have co-signed the agreement in order for you to get the loan. By refinancing, you can free their credit up to help someone else (like one of your siblings). If you have made payments on time for 12 months, it should have reflected on your credit history positively. If so, you can refinance into your name alone.
3. Reduce the profit margin – When car dealers arrange financing, their markups are also included in the loan. This means that you are paying a fair amount towards their markup in your monthly payment. Refinance it and you can cut it out sizably.
4. Better rates – The obvious reason to refinance. Lower rates means that your monthly payments come down drastically. This will give you a little bit of breathing room when it comes to that time of the month where you have to pay all the bills.