Purchased a vehicle recently? Stuck paying over 15% in interest?

You’re not alone. Most rinky-dink car dealerships promise you the world, then stick it to you when they loan you a car paying ridiculous interest fees. They tell you that it’s only temporary, to wait a year or so of on-time payments, and then advise you to refinance in a year or so. Let read what is the best time to refinance your auto mobile.

This is furthest from the truth. The longer you wait, the worse situation you will be in. Assuming you had terrible credit when you bought the car, the best time to refinance is when your credit is in better shape. We recommend financing within 6 months of purchasing the vehicle.

If you wait too long, your interest will accumulate which will increase the amount of the loan.

PAY ATTENTION

• Your car already depreciated when you drove it off the lot
• You are now accumulating interest on the balance that you owe

So what does it mean to refinance? 

Refinance is when you ask another bank to take over an existing loan. For them, it’s a matter of winning your business, if you are already paying 17% interest, the other bank will write a check to the current bank and charge you a 10% interest instead for example.

The problem is that most people wait too long to refinance, and end up owing more than the car is even worth. This, is a red flag for the bank, who only wants to loan you an amount reasonable to what the car is worth, just in case you stop paying they can use the car as collateral.

If you owe $30,000 on a car, and the balance on your loan is $40,000, in order to look favorable for a refinance, you would have to pay $10,000 on the balance you owe with the bank, so that the car is the same amount as the loan, only then would the bank consider it a safe investment.

The reason why a house is easier to refinance is because homes usually “appreciate” not “depreciate”

Meaning the house goes up in value instead of down in value like vehicles. This means that banks can give you better interest rates from the beginning so you’re never “upside down” on your balances.