Ripple kopen? Dit zijn de mogelijkheden
18-9-2019 15:42:34

2 years after buying my first car, I’m getting offers in the mail to refinance my auto loan. Here’s how I’ll figure out if any are worth taking.

I’ve been getting offers in the mail to refinance my auto loan, and for the first time I’m considering it. My car loan has an interest rate of 7.34%, and I have $10,433 left to pay off. If I can refinance with better terms, I could save money now and in the future. I’m only interested in refinancing if it will save me money in the short and long term. I’ve evaluated three offers so far, and only one meets that criteria. Want to see what kind of offers you’d get? LendingClub can help you find lenders to refinance your auto loan and save money » Visit Business Insider’s homepage for more stories. I bought my first car in 2017 after driving the one I was given in high school for about ten years. I bought an affordable and economic hatchback that cost about $12,000 plus taxes and fees. I financed it in full with no down payment, and the total loan came to $14,428.72. My interest rate was 7.42%, and my monthly payment is now $251 a month, but I pay $277 so that I can pay off my loan faster than the 72 months I financed it for. Because I automate all of my monthly payments, I have put this bill out of my mind entirely and sleep soundly knowing I am making all of my payments on time. I don’t even think about it except when I get the monthly email notifying me that my payment has been made. But lately, this loan has been on my mind. Why? I’ve been getting offers in the mail to refinance my auto loan with interest rates as low at 3.99%. So I took a look at what I would save and whether it would be worth it. Here’s what my car loan currently looks like:Balance: $10,433 Interest rate: 7.42% Remaining term, in months: 51 Total Interest: $1,663 Estimated total cost: $12,096 Monthly payment: $251 (I pay $277) The principal balance remaining on my loan is now $10,433. According to my CreditKarma account, I could save significantly if I choose to refinance it. But I’ll only do it if I save in the long run. I used CreditKarma to take a look through three offers I got to refinance my auto loan: Lender A is offering me a higher interest rate with a lower monthly payment Let’s look at the first offer.Balance: $10,433 Interest rate: 7.79% (as low as) Remaining term, in months: 60 Total interest: $2,190 Estimated total cost: $12,623 Monthly payment: $211 The first lender, who we’ll call Lender A, is offering me a monthly payment that is $40 lower than what my monthly payment is right now. But after a closer look, you’ll see that interest rate is actually higher. The monthly savings is only due to a lower principal, but I’d actually be paying roughly $600 more for this loan in its lifetime. This scenario would only be worth it if my cash flow was stretched so thin that I had no other option but to refinance and free up discretionary income. Even so, the savings is only $40 a month, which to me is just not worth it. I am going to say thanks but no thanks on this one.Want to see what kind of offers you’d get? LendingClub can help you find lenders to refinance your auto loan and save money » Lender B has a significantly lower interest rate, but simply isn’t the best offer I can get The second offer looks like this:Balance: $10,433 Interest rate: 4.64% (as low as) Remaining term, in months: 54 Total interest: $1,150 Estimated total cost: $11,583 Monthly payment: $214 I’m also not going to consider the second offer. Why? The savings is not as great as other offers. Sure, the monthly payment would be less, but for all the hassle I’m not sure it is worth it for $513 of savings in four and a half years. Lender C is the best deal I’ve seen so far I would consider an offer like this last one:Balance: $10,433 Interest rate: 3.74% (as low as) Remaining term, in months: 60 Total interest: $1,022 Estimated total cost: $11,455 Monthly payment: $191 The drop from a 7.42% interest rate to 3.74% is significant enough to save me $60 on my monthly payment and about $641 in total. This total savings is about $128.20 per year. While there are other ways to make more money faster, I would still consider this loan because I would save money in both the short term and the long run. Last, I happen to know that the last time I checked, the lowest offer I saw was 2.99%. Since then, I made a major purchase using 0% introductory interest, and my credit utilization ratio is now higher. So, if I want to go forward with auto refinancing, I will first pay off those credit card balances and ensure the credit check is relying on the latest information. Since a loan increases the amount of credit available to you, auto refinancing can be a great way to decrease your credit utilization ratio if you need to lower the ratio for a major purchase on the horizon. But auto refinancing is not the most important thing on my to-do list right now, and I am not sure I will do it. If I do, I will triple check to ensure there are no fees that could wipe away my $641 savings, and I will enjoy the extra wiggle room by putting more money in my savings account. Thinking of refinancing your auto loan? LendingClub can help you find the best offers to save money »More personal finance coverage What’s the best airline credit card? The best cash back credit cards Are CDs a good investment? When to save money in high-yield savings Best rewards credit cards The post 2 years after buying my first car, I’m getting offers in the mail to refinance my auto loan. Here’s how I’ll figure out if any are worth taking. appeared first on Business Insider Nederland.
Lees het volledige artikel bij "AFN"

Wat denkt u?

Invoer toevoegen

pagehit