If you have purchased a new or used car in the last couple of years, you know that the excitement of purchasing a vehicle can sometimes overwhelm you. Instead of focusing on the interest rate and trying to get the lowest one possible, some people are so caught up in the moment that they end up with a higher rate than they could have gotten.

Rates vary from dealer to dealer and state to state. Some reported getting an interest rate of almost 19 percent, which is ridiculous, even in a bad economy or with bad credit. The interest rate is reliant upon several factors. Your credit, or the lack thereof, the price of the vehicle you are purchasing, and how long you are financing it. It also depends on how much effort you put into shopping around for the best rates!

There are several programs available to help you to reduce your interest rates. A second chance finance offer can lower your interest rate by up to 11 percent. Refinancing car loan payments can make sense if you think about the long-range advantages as well as the current ones. Yes, you will have a lower payment but you can also save thousands on interest depending on the price of your car.

As an example, consider a car loan financed for 84 months at 12.6 percent. If you can get your interest rate lowered to even 8.99 percent and a year cut off the financing time, a savings of over $7600 in interest payments are realized. Now this is really when a refinancing car loan makes sense. Remember, you are no longer financing the entire brand new cost of the car, but only the outstanding balance where you have already reduced that balance from the payments you have been making to date.

The good news is that not only do you save money on interest but when your car is paid off, it will have a higher value than if you had not gotten the year cut off the financing time. Another year of wear and tear on the vehicle makes the value go down, so in reality it would be worth less than if you paid it off a year earlier.

Usually a typical finance rate on a 60-month loan is 8.99 percent with decent credit. But with 9 cuts in ten months by the Federal Reserve Board, who knows what the typical rate is going to be today or tomorrow. One thing that does tell you though; now is the time for a refinancing car loan.

When considering your refinancing car loan options, be sure to consider how the interest rate on the loan you have now is calculated. If it is a simple interest loan, you are being charged interest everyday on the balance of the loan.

Can you pay your car off early or is there a prepayment penalty for this? This is one thing of many factors you need to know about your finance company. Even if you do not have good or excellent credit, you can apply for a refinance. If you refinance, is your state going to charge you a fee for changing the name of the lender on the title of the car? Some states do and some finance companies pay this while others do not.

It just makes good sense to check into a refinancing car loan. If you only save $500, that is money that you can use on other things in this day and age, like perhaps, gasoline.