While interest rates have dropped to historic lows, many consumers are not aware that you can refinance your auto loan in the same way you refinance the mortgage on your house. With the US economy struggling to get back on track, many consumers are pinching pennies and trying to find any way to lower their monthly expenses. What many consumers are discovering is that refinancing an existing auto loan can help save them hundreds, sometimes thousands of dollars over the life of their loan and is making a significant reduction in their monthly payment.

Does auto refinance really make that much of a difference? Yes! For each percent you can lower your interest rate on a $20,000 loan financed for 60 months, you can save approximately $10 in your monthly payment. So let’s assume when you purchased your vehicle, the dealership marked the rate up that you would have normally received had you financed directly with the lender. In this case, let’s use 14%. Now, you have driven your care for a few months and someone told you about the ability to refinance your current auto loan. You find a online lender that offers consumers the ability to do just that. You complete an auto refinance application in just a few minutes and get approved to refinance your existing auto loan at just 9.5%. In just a few minutes your payments would go from $465 per month down to $420. That’s a $45 per month saving or $2,719 over the life of the loan and if you decided to refinance it at a slightly longer term, your payment could be as low as $365 per month saving you an even $100 per month. I don’t know about you, but an extra $45 per month in my pocket is a good thing. We have seen some cases where a consumer was able to save $150 per month in their monthly payment.

If you want to lower the overall cost of the loan, refinance the balance that you owe on the car and do so in the fewest amount of months that you can, as long as you can handle the monthly payments.

We could run a number of scenarios but one quick way to check out rates and payments is to use an auto loan calculator to estimate payments and loan costs.  By refinancing at a competitive rate, the monthly payments would be slashed, and all it takes is about 5 minutes to fill out the application. Regardless, interest rates won’t stay at these levels forever and you owe it to yourself to do the research and determine if refinancing your current auto is right for you.