Refinancing a Car Loan - Why Is It so Popular All Of A Sudden?

Typically, lenders have always only tried palming off refinancing offers on unsuspecting homeowners . They tell them that if they would only agree to a refinancing deal, they could easily lower their payments. A lot of the time though, their persuasive arguments are just a lot of hogwash. Well, apparently, homeowners are beginning to wake up to this fact. Thus the banks are beginning to try to push refinancing car loan just the way they did home refinancing in years past.

And it's a real hit with car owners, too. More and more, car owners who have bought their cars through a financing deal are trying to see if they can take the banks up on their offer and rework their terms. Car refinancing applications are up by around 30% this year over last year.

In fact, the banks are finding that they're getting more people interested in refinancing existing loans that getting applications for new car loans. Refinancing a car loan is such a popular thing these days that lenders who have traditionally never got themselves mixed up with the car financing business, are trying to jump in now.

It is somewhat understandable why all these car owners would be interested in refinancing a car loan right now. They are looking at how they borrowed to finance a car a year or two ago when interest rates were over 7%. Interest rates today are at just 6% today, they're wondering why they shouldn't take advantage of it through a refinancing deal. You might think that 1% doesn't sound like a big deal; why would people not want to go to all this trouble for that? It's not just the 1% though. Anyone who's bought a car a year or two ago, chances are that their credit rating wasn't that good then. Refinancing a car loan today, they have a chance to take advantage of their improved credit. They'll get better rates.

So this is all a wonderful idea, right?

Well, maybe it is for some people. But you do have to understand that if you bought a new car today, you would get a 5% interest rate. And there are some dealerships that offer 2%. You might do even better for yourself if you bought a new car instead of flogging that old dead horse.

Lenders apparently, want to take your attention away from the fact that if you bought a new car, you would get a much better deal. They just advertise how refinancing a car loan saves you money, so they get to charge you a little more interest than they would if they just sold you a new car loan.

Dealerships love refinancing deals because it helps them get people into the dealership so they can talk to them. They hope that they can talk them intobuying a new car from them not long from now.