Auto Loan Refinancing: Lower auto loan interest and monthly payments

If you still owe over a third of your vehicle's original price (but have had the loan for at least a year), you may be able to save $1000 or more with an auto refinancing loan.

It's free to find out if you qualify for a lower interest rate, especially if you had poor credit when you first obtained your existing loan. Basically, if you're carrying both a substantial balance and a higher-than-current interest rate, auto refinancing may be right for you.

How an auto refinancing loan works: Auto refinancing is a very simple and inexpensive process. It's really nothing more than substituting your original auto loan for a new one with a lower rate.

An auto refinancing loan is really nothing more than paying off the old loan with the proceeds of the new one. Auto refinancing online: It's a fast and painless process to apply for an auto refinancing loan.

Love your car but not the hefty interest rate you're paying? Getting an auto refinance loan may be the way to go. Many people buying a new car don't pay enough attention to the financing deal.

And if you had credit problems in the past, a refinance loan might be a good option even a year or two into an original loan. Let's say that, because of damaged credit, you accepted an auto loan with an interest rate of 18 percent or more. If you've built up job stability since the purchase and made loan payments on time for a year or more, you may qualify for a lower interest rate.

Inching a loan's interest rate down even a percentage point or two can save hundreds of dollars in interest and bring lower monthly payments. Say a borrower is paying 8.9 percent interest on a $10,000 loan over 60 months. The monthly payment is $207.10 and interest will total $2,426.74.

Drop the interest rate to 6.9 percent and the monthly payment dips to $197.54 and the interest to $1,853.05, with a savings of $573.09.

The first step to getting a better loan is taking a closer look at the loan you've already signed.  Does your current loan charge prepayment penalties? Some loans smack borrowers who pay off a loan early with fees ranging from $25 to $200. How is the rate on your current loan calculated? Is it calculated with simple interest? With a simple interest loan you're charged interest each day based on the balance you owe.

Refinancing makes the most sense and yields the biggest savings when a simple interest loan with no prepayment penalties is refinanced into a simple interest loan with a lower rate.

In any case, to snap up a good auto refinance deal, you'll make sure there are no unpleasant surprises on your credit report.

The sooner you refinance a high-priced auto loan, the more money you'll save in interest.

Use our free auto loan calculator.