You may not have considered refinancing your auto loan. Perhaps you have only a year or less before your current car loan is paid off, or you are satisfied with your current interest rate. Auto loan refinancing may still be a viable option for you; here are some situations where it might benefit you to refinance your auto loan.

The longer repayment time you have left on your current auto loan, the more savings you will realize by refinancing your loan at a lower interest rate. Assume you borrowed $15,000 on your current auto loan for 60 months with an interest rate of 10%. Your monthly payment would be about $319. After paying on the loan for one year, the remaining balance would be approximately $12,566. If you refinanced the balance for 48 months with an interest rate of 8%, you would lower your monthly payment to around $307 while not changing the payoff time of your loan.

If, however, you want to lower your monthly payments dramatically, the answer is not only to try to get a lower interest rate on your auto refinance loan, but also to extend your repayment time. If you take the balance of $12,566, and amortize it over 60 months with an interest rate of 8%, you would lower your payments to $255 per month.

What if you only have 2 years left on your auto loan? Using the above example, at this point you would have a balance on your loan of about $6907. You could refinance for 24 months, lowering your payments to $312; probably not even worth your time. Even if you were able to get an interest rate of 6%, you would only lower your monthly car payment to $306 ? still nothing to get excited about. Take the loan and refinance it at 8% for 36 months, and your monthly payment drops to $216, a much more substantial reduction of your monthly payments.

Assume that you have been making car payments on a 72 month loan with a 14% interest rate and a beginning balance of $15000, for a year. Your monthly payments are $309, and your remaining balance is $13,079. You refinance the loan for 60 months, not changing your payoff time, but this time you are able to obtain an 8% interest rates. Your monthly payment drops to $269 per month. If you continued to make the same payments of $309 as before, then you would shave nine months off the payoff time of your loan.

Once you have defined your objectives in refinancing your car loan, you can begin shopping for auto loan refinancing quotes. There are many lenders who offer free online quotes, though you may have to provide some personal information to determine what kind of interest rate you qualify for, and if your credit and income level are sufficient to obtain the amount of credit you are seeking.

Compare several auto loan companies online to get an idea of what you can expect in the way of interest rates and terms. Before settling on a lender, read the fine print and beware of any hidden fees. If you don't already know your FICO score, order a free copy of your credit history report from the three major credit reporting bureaus, and make sure all items on the credit reports are accurate. Choose a reputable lender that offers you the best interest rate and a payoff time that you find acceptable. An auto refinance loan is a practical way to save money, pay off your debt more quickly, and lower your monthly car payment.