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Cheap auto loans spur more to refinance

[Aug 30, 2010.]

 

Cheap auto loans easier to find


This blog has reported repeatedly that it's continuing to get easier -- even for those with poor credit reports -- to be approved for a car loan. Confirmation that trend is continuing came August 25 from The Wall Street Journal, when it previewed a report that's due out soon from Experian Automotive.


It said that 18.2 percent of all auto loans granted in the second quarter of 2010 went to people with below-prime credit histories, which compares with 17.6 percent during the same period in 2009.


That's not an enormous jump, but the Journal quoted an Experian director who called the shift "an early sign that finance companies are warming to consumers whose credit scores are below the 700 range."


Auto loans through dealerships


August 29's edition of The Washington Post carried a story that should interest many who financed their vehicles through their dealerships. Anyone who visits this page regularly already knows the many pitfalls that can await those who arrange auto loans through dealers. But the Post reinforced the message when it pointed out:


...dealers are a middleman in the transaction. They typically mark up the interest rates they get from lenders to make money. Another reason to check how much you're paying? Dealers are leaning more heavily on auto loans for profits as shoppers get savvier about researching car prices online.


Trapped in an expensive auto loan? Refinance


The Post went on to encourage those who are part way through paying off an expensive auto loan to consider refinancing. This is a much simpler process than refinancing a mortgage, and can work particularly well for those whose credit scores have improved since signing their original finance applications.


It does take a little time and effort, but the rewards can be considerable. The Post gave an example of someone who has a $20,000 loan at 10 percent. Refinancing to eight percent would save $250 a year, which can add up to big bucks over the term of a finance deal.


The day before the Post's coverage, The Boston Globe also ran a feature advocating auto loan refinancing. Under the headline, "Unlike redoing mortgages, refinancing a car loan is quick, easy and profitable," it explained that some lenders may require a vehicle not to be above a certain age, or to have too high a mileage before they consider it. But it also said that many lenders aren't too concerned if you've been late with a few payments, providing your credit report still looks okay overall.


Cheap auto loans -- finding a great deal


Whether you're thinking of refinancing, or buying a new or used car, you can find competitive auto loan quotes here.

 

About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.

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