Refinancing vs. Trading in Your Car

Should I refinance or trade in my car? That is a question that millions of Americans are asking themselves right now. The truth is, there is no clear-cut answer. However, a few factors can help you make the correct choice. These factors will help you make a well-educated financial decision on what to do with your car.

Refinancing a car loan has many advantages, it can lower your monthly payment, lower your interest rates and help you secure a better deal on your car loan. When should you refinance your car loan? If you love your car, then by all means, try to refinance your vehicle. If your vehicle is in excellent shape and has no mechanical trouble other than routine upkeep (oil changes, alignments, tire rotations, tuneups, etc., then continue driving your car. If your credit score has improved from the time you first secured your car loan, you can use this as leverage to secure a loan with better interest rates.

You should trade in your car when your vehicle has more equity and or if your vehicle is having mechanical trouble. If your vehicle’s value is high and you have plenty of equity, a trade-in can be a great idea. The equity can be used as leverage to pay off your remaining loan and perhaps you can purchase a cheaper car to lower your monthly expenses. If your vehicle is having mechanical trouble and you don’t have the money for repairs, considered trading it in. If your vehicle still has a great value and you can’t afford to fix it, this could be a life-saving option.

 

 

Categories: Finance