Avoid Using a Car Loan Refinancing Calculator, Request Loan Quotes from Lenders and Find Loan Rates Available in Your Zip Code!

In the complicated world of auto financing, it can be difficult to know if you’re getting a bad deal, good deal or a great deal on a new car! When you understand how a car loan refinancing calculator can confuse car loan shoppers, you’ll be armed with the facts to determine the right way to finance your car purchase.

Using a car loan refinancing calculator often gives an inaccurate idea of the benefits of refinancing. A car loan refinance calculator is a tool used by companies who are trying to get your business. Don’t get taken in by this gimmick, instead, request your free auto loan quote and get access to available offers in your area today!

Leasing vs. Financing Your New Car, Truck or SUV

The first decision you’ll need to make is whether you want to lease or buy your new car. Each option has its pros and cons, take a look at the below and choose what’s right for you:

Leasing

If you’re the type of person who likes to get a new car every few years, leasing is worth your consideration. Just like financing, leases can be negotiated through dealers, banks, credit unions, or finance companies.

One major plus is that if you lease, your car will likely remain under warranty for the whole time you drive it. Additionally, the monthly cost of a new car lease is significantly lower than if you were buying the car. You can also deduct lease payments from your taxes if you use it for work more than 50% of the time, though you should check with an accountant to be sure. It may also be possible to avoid forking over a large down payment, as many lessors don’t put anything down at the start.

As far as downsides go, you won’t be left with any equity once you return the car. Additionally, your lease payments are based on the estimated value of the car when the lease ends, and this is often overstated to benefit the lender. You also have to stay under certain mileage limits or face hefty fees, as well as returning the car without any major bumps and bruises.

Financing

Financing is the more popular option for Americans to purchase new cars. By borrowing money from a lender to pay for your car, you free up the cash that would otherwise have to be spent all at once. You also own the car at the end of completing your payments, unlike with leasing. You might even be able to get one of the advertised zero-percent financing offers that automakers advertise, if your credit is up to par.

That being said, if you want a new car before paying off the old one, your options may be limited. This is especially true if you’re “upside down,” or owe more than the car is worth, as is the case with many buyers in the beginning. You also need to realize that you don’t truly own the car until it’s been paid off completely. You also should plan to make a substantial down payment of about 10-15% of the purchase price.

Why Car Loan Refinance Calculators Are Misleading

When you see an ad on TV promising to save you thousands with car loan refinancing, you might be tempted to sign on right away. Unfortunately, a car loan refinance calculator can misrepresent the true cost of refinancing, leading to short sighted and reckless financial decisions.

If you are stuck with a high interest rate or hefty monthly payments on your car loan, you might be tempted to try to reduce it with a car loan refinance calculator. However, those lower rates often come packaged with longer loan terms that end up costing you money in the end. While drawing out the length of the loan to reduce your payments might seem like an easy way to free up some extra cash, the cost at the end is higher, as you pay interest on the additional length of the loan. And unless you get a drastic reduction in your interest rate, the savings you see could very likely be wiped out by the fees involved in refinancing.

One thing you need to remember is that cars depreciate rapidly. That leads to many buyers being upside-down at first. If you try to refinance during this time, the lender may require you pay the difference between the value of the car and the loan balance up-front.

Another important aspect of auto loans is that the lender gets paid first- you pay the interest in the beginning, and the principal towards the end. So if you’re already paid most of the interest to your initial lender and you decide to refinance based on a car loan refinancing calculator, you now have another lender to pay interest to, on a still-relatively-high principal.

Finally, if you’ve been driving your car for awhile, it’s already lost some significant value. This affects the type of financing that it qualifies for and how much you’ll have to pay to refinance.

Request your free no obligation to buy car loan quote today and get access to available auto loan rates in ! You can request as many quotes as you want and compare them to find the best deal available, why refinance when you can get a great deal on a new car auto loan!