Auto loan modification could be a good option


Paying Mercedes rates on a Mercury budget? Look into auto loan refinancing. Image from Wikimedia Commons.

Some people might be led to believe that loan modification is just for mortgages, but that really isn’t the case. You can refinance your auto loans, too. In fact, right now could be a better time than ever to refinance car loans, as rates for car loans are lower than they have been in a while. You can turn your car loans into low interest loans if you refinance at the right time.

Refinancing not only for mortgages

You can refinance a car loan just like you can get mortgage loan modification. In fact, the rates available for car loan refinancing are low enough right now that you may not be able to afford not to refinance your car. According to the Washington Post, auto loan rates are trending lower. Lenders are looking to lend, and dealerships are looking to sell. However, bear in mind that there’s a difference between a loan you get from a bank and one from a dealership. Loans from a dealership often carry higher rates because they’re trying to make more money as the middle man between you and the bank.

What’s the catch?

There is, as there always is, a small catch. Auto loans are tied to your credit score; the higher your score, the lower the rate. So auto loans for bad credit may not be able to be refinanced or even modified. The same article in the Washington Post puts high credit score auto loans at 5.7 percent, but those for low credit score borrowers are as high as 18.5 percent. There are also fees and conditions imposed by each individual lender, so make sure you do your homework.

To refi or not refi?

Well, this is available more for people with great credit, rather than for those who aren’t. Also, you want to be careful of who advertises loan modification. The fastest growing type of scam around is the loan modification scheme, so make sure you know who you’re doing business with before you commit or hand over any cash.

Further Reading

The Washington Post

Other recent posts by bryanh