Refinance a 72 Month Auto Loan
I got a car loan for 8k for 72 months on a 24.99% APR. I want to pay it off within a year to avoid high interest rates.
What other options do I have? Can I refinance for lower rates?Answer:
If you did not pay it off in a year, then you'd definitely want to refinance your 72 auto loan, because the interest rate is very high.
Even though you are not borrowing all that much money 24.99% is a very high rate and if you were to go the full 72 month term of your loan you'd probably pay close to $7000 in finance charges alone.
Based on the rate you were approved for I'm going to assume that you've had some credit issues in the past.
The first thing you'd want to do is clean up your credit as best as you can. Get your Credit Score at CreditReport.com
In order to refinance, your credit has to be at least decent. There are no lenders that I know out there that will refinance really bad credit. Once you've got your credit report, dispute any inaccurate information and pay legitimate collections.
In addition, be absolutely sure to make all of your payments on time. With past credit problems and a slow paid current auto loan, you will really damage your credit rating.
How soon you can refinance will depend on how quickly you can get your credit cleaned up. I'd say keep this loan for at least a year as that will further help to rebuild your credit.
Even if you are not able to refinance, but still want to pay the loan off early, I'd try to go out at least 18 months. This will help to give your credit more depth.
One way or the other, you definitely want to try to get out of that 24.99% auto loan in no more than 2 years. Otherwise you will be wasting a bunch of money on finance charges (bank profits).
Hope this helps,