What's Happening?
CNBC has provided guidance for consumers considering refinancing their auto loans due to increased car prices and interest rates. The average monthly car payment has risen by nearly 30% since 2020. A TransUnion survey indicates that 63% of respondents are contemplating refinancing within the next year. Factors to consider include improved credit scores, changes in interest rates, remaining loan balance, and the desire for better rates or longer terms. The Federal Reserve's potential interest rate cut in September could make refinancing more appealing.
Why It's Important?
Refinancing auto loans can offer financial relief to consumers struggling with high monthly payments. It allows borrowers to secure lower interest rates or extend loan terms, potentially reducing financial strain. However, refinancing can also lead to higher overall costs if the loan term is extended. This advice is crucial for consumers navigating the current economic climate, where interest rates and inflation are impacting personal finances. Understanding the implications of refinancing can help consumers make informed decisions about managing their debt.
