Photo of a car loan quote.
Car loans can be refinanced just like mortgages. CC by TheTruthAbout.../Flickr

Loan modification can be for more than just mortgages. Auto loans can be refinanced as well, and now is a good time to do that. Rates for car loans are pretty low. If car owners act quickly enough, they can take advantage of the current low interest rates through auto loan modification.

Refinance more than just your house

Just like mortgage loan modification, cars can refinanced as well. In fact, the rates available for car loan refinancing are low enough right now that to not refinance a car may be too costly an opportunity to pass up. Many interest rates on loan products have been trending downwards. According to the Washington Post, that includes auto loans. Dealers want to sell cars, and lenders want to lend. That said, bear in mind that dealership financing and bank financing are a bit different. One is usually more expensive than the other. Dealerships have an incentive to push loans through themselves. The reason is that dealerships are middlemen, and they get a bonus for loans lent at a higher rate.

The whole story

There is a slight hitch. Auto loans, like so many other types of loans, have the rates determined by credit score, so if a score is high, the rate is low. Auto loans for bad credit may not be able to be modified. Borrowers may have to just sweat it out, if that’s the case. For those with great credit, the market rate is 5.7 percent whereas poor credit loans have a market rate of 18.5 percent, according to the article on the Washington Post website. There are also fees and conditions imposed by each individual lender, so people would be well served by doing their homework.

A great time to refinance

Refinancing is a viable option for people with great credit, rather than for those whose credit has suffered. Also, anyone looking into refinancing anything, whether a car or a house, should be wary of offers for loan modification these days. There have been several instances of scams in this industry. Consumers should be sure to thoroughly check out prospective lenders when thinking of enrolling in a loan modification program before committing to anything at all.

Sources

Washington Post: http://washingtonpost.com/wp-dyn/content/article/2010/08/28/AR2010082800170.html



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