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Loan Terms

Refinance

By refinancing and paying off your existing car loan, you may be able to save money. Rates may have dropped since you took out your previous loan. Now could be a great time to check your rate and save if you have been keeping up with your payments.

Does refinancing hurt my credit?

You can save money by refinancing a car at a lower interest rate, which reduces your monthly payment, giving you more breathing room in your budget. When you refinance a car loan, it could temporarily ding your credit score, but it’s not likely to hurt your credit in the long run.

When should I refinance?

While technically you could refinance your car as soon as you buy it, it’s best to wait at least six months to a year to give your credit score time to recover after taking out the first car loan. That way, you can build up a payment history and catch up on any depreciation that occurred when you purchased.

Money Down

Benefits of making a down payment on your vehicle

If you make a larger down payment, your monthly payment is likely to be lower and your interest rate will probably be lower too.
If you put down $1,000 on a $47,000 car, your monthly payment will drop about $20 per month (based on a 5% APR), but this can vary depending on your situation.
Looking at the bigger picture, putting money down will put more money in your pocket over the course of the loan.

Trade In

Trading in your vehicle at a dealership allows you to apply the trade-in credit towards your new vehicle, reducing the amount you need to finance. It is important to understand how much your vehicle is worth before you trade it in. This will allow you to feel confident and empowered when negotiating. It may also increase your chances of getting a fair price for your trade.
There may be tax advantages associated with trading in your vehicle!

Most states mandate that sales tax be paid only on the difference between the trade-in value and the purchase price of the vehicle, not the entire cost of the replacement vehicle. However, if you sell your old car on your own, you are not eligible for this tax break. For more information, contact the Department of Motor Vehicles (DMV) in your state.

Focus on the bottom line at all times. The net amount you have to pay is what matters. Before you sign the sales deal, make sure you have read and comprehended it. Always ask questions if you are unclear about any terms or conditions.

Beat The Bank!

When considering a car loan, interest is the price you pay to borrow money from the lender. You, as a borrower, are expected to repay the amount you borrow plus interest in monthly payments over the life of the loan. Your interest rate is influenced by a number of factors like your credit score, the loan term, and the size of your down payment. Over the life of the loan, interest can take a heavy toll on your wallet, but it doesn’t have to be that way.

Strategies to Beat the Bank

Down Payment

  • A larger down payment will minimize the amount of money you borrow from the lender.

  • Borrowers who put more money down for a car can expect a lower interest rate because the lender views them as a low risk borrower.

Credit Score

  • High credit scores generally get lower interest rates with loans.

  • If your score goes up, consider refinancing the car loan for a better interest rate.

Loan Term

  • Minimizing the length of your loan term will also reduce the amount of money you pay in interest to the bank overall.