This is a guest post by Rachel Kerr
Most times, when you go to refinance your auto loan you’re looking to save money, either monthly or over the term of the loan. You can do that by lengthening the term of your loan to reduce your monthly payment. Or you can secure a lower interest rate, thus reducing the amount of interest you’ll pay over the life of your car loan. Either way, when you decide to refinance your auto loan, you will no doubt have money left over. But what will you do with the money you’ve just saved? Here are just a few suggestions to consider.
- Start a savings account. Open an account to save for car repairs, maintenance or just simply to have cash on hand for your next big purchase or household emergency. Put the difference of your monthly car loan payments away and save that money for the future.
- Save for your next car. It’s hard to come up with the money for a new car without preparing. So whether it’s the down payment for your next car or enough to buy your next car with cash, you can use that monthly savings to start preparing for your next car purchase.
- Prepare for your future. There’s no better time than the present to plan for the financial future of your family. Your options are endless. From money market accounts to CDs and IRAs, there are solutions out there that make sense for your financial situation.
- Pay off your car loan early. When you refinance your car loan, you are usually left with a bit of savings each month from a lowered interest rate or different terms. This money could help you save even more on your car loan if you decide to use that monthly savings to increase your payments each month. That way, you’ll pay off your loan even earlier than expected and save money in interest.
- Pay off your debt. Do you have credit card balances? What about school loans or a mortgage that you wouldn’t mind paying off earlier than expected? If so, you can use the money you save each month on your refinanced car loan to pay off these other loans and balances.
These are just some of the ways you can use the savings you get from refinancing your car loan to help your hard-earned money work harder for you. It’s easy to take the money you’ve just saved and spend it without even thinking about all the ways you can save even more.
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