Pandemic might be best time to refinance auto loan to save money on your car

CHICAGO (WLS) -- When people think of saving money, they rarely think of refinancing their automobile, but right now may be the best time to save cash with your car because. As the ABC 7 I-Team found out, the pandemic has created an opportunity for savings.

"Our payment went down almost $150," said Jason Mason, when he discovered how much he and his family will save each month on their car payment. "It's pretty easy. A smooth process and worked out real well."

The Mason's had just bought a home and were looking to refinance it when they bumped into information about refinancing their car. Their interest rate on their Subaru went from nearly 8% to 3.24%.

"I think it's the first time I've ever refinanced anything online, which, it was surprisingly easy," Mason adds.

"People need to think about refinancing their cars just like they refinance their mortgages. Car loans, outstanding, are actually the third highest consumer debt that Americans own,"said Chris Spelt, who runs Rate Genius, an auto loan platform that has a network of 150 lending institutions. "Last year, our study showed that on average consumers save just a little bit shy of $1,000 per year in refinancing their existing car loans."

You can use other similar platforms, or you can contact banks and credit unions on your own for refinancing. Just make sure you look around and compare rates.

Speltz said no matter where you go, the process is fairly easy and refinancing fees make it work the money.

"It's not as complicated and not as much paperwork compared to a home loan, so there's not all these fees associated with recording your mortgage and all those kinds of things. The fees are very manageable usually $100 to $200," he said.

Speltz said the pandemic has helped to increase your chances of being able to get approved for refinancing.

"Last year with a pandemic, because new car manufacturing and new car sales decreased dramatically, especially when some of the manufacturing companies ceased manufacturing at the beginning of the pandemic, the value of used cars rose by like 15%, 17%, 18% last year, which made it easier to refinance because your car was more valuable," Spelt said.
That's just what happened for the Masons.

"If you have the option, I'd do it, 100%," Mason said. "It's super easy."

There are tips to follow before you try to refinance:


  • Make sure you are paying your current car loan on-time, consistently. That will improve your credit score.

  • The less you owe on your car, compared to its value, makes you attractive to lenders.

  • And an automobile less than 8 years old, is considered a good candidate.
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