Whether due to job loss or a feeling of general economic uncertainty, we’re all pulling our purse strings a little tighter right now.
A recent survey from WalletHub found that 67 million Americans anticipate that they will have trouble paying their bills because of the coronavirus pandemic.
If your car payment is one bill you’re worried about paying, read on. Interest rates are at historic lows. Refinancing your auto loan could be one of the easiest ways to trim down your monthly expenses and immediately increase your cash flow.
Refinancing lowers your interest rate & monthly payment
In early 2019, new-car payments averaged $554 per month and used-car payments weren’t far behind at an average of $391 per month, according to the Experian State of the Automotive Finance Market report. However, that average might soon be shifting alongside the pandemic landscape. Many drivers may be able to lower their loan interest rate, and therefore their monthly payment when they refinance.
Refinancing means you take on a new loan to pay off the balance of your old loan. The new loan generally comes with a more favorable interest rate, which can lower your monthly car payments significantly. Lowering your monthly payment can free up cash in your monthly budget.
Here’s an example from one of our refinance customers, rlockett.
“I received an offer almost immediately. I do not have a great credit record and I am trying to rebuild my credit so it’s hard to get approval. I wanted to refinance a car loan which I was paying almost 11% interest. I was able to receive a refinance loan through myAutoloan from a credit union and now I am down to about 6.5%. I would recommend!”
Other refinance customers have been able to secure even lower interest rates, sometimes as low as 2.24%. Check out today’s lowest rates for all loan types.
Refinancing can postpone payments for up to 90 days
Select lenders are offering even more benefits for qualified borrowers -- no payments for up to 90 days. Would taking one line item out of your monthly budget for three months help your situation? Think about it. That’s one less bill to worry about for a little while. Postponing your car payment for 90 days could give you the financial breathing room you need to:
- Buy the groceries your family needs
- Stock up on supplies
- Pay your mortgage or rent
- Pay for medical care
- Sleep easier and feel less stress
Alternatives to Refinancing During COVID-19
Refinancing isn’t the only way to improve your car loan situation during the coronavirus pandemic. Many automakers and lenders are setting up programs that allow borrowers to defer loan payments if they’ve financially impacted by the pandemic.
For example, Honda and Acura are offering 60 days of deferred payments and late-fee waivers for owners impacted by the virus, reports Edmunds. Kia is offering up to 90 day payment deferrals, and Mitsubishi is allowing deferrals for up to 120 days. Many other automakers are working with owners on a case by case basis.
Take Your Next Step
Still in the research phase of refinancing? Read five steps to refinance your car loan. Ready to pull the trigger and see how much you could save by refinancing during the Coronavirus pandemic? Apply now and compare up to four refinancing offers in minutes. You don’t know how low your new interest rate could be if you don’t apply. Our applications are fast, free, and 100% confidential.