The processes of refinancing or trading in your car each have their unique pros and cons. Depending on your situation, either arrangement might suit you. How do know which is best for you? Our Acura of the Rio Grande Valley team offers this brief guide.

Pros and Cons of Refinancing

When you refinance your car, the pros are:

  • You may qualify for a lower interest rate
  • You can negotiate a different loan length or term

The cons are:

  • Your credit might not be sufficient to refinance
  • Your existing loan contract might contain prepayment penalties

Pros and Cons of Trading In Your Vehicle

When you trade in your car, the pros are:

  • Fast and easy
  • You get a different or new vehicle
  • You can get a less expensive vehicle
  • You begin anew with a brand new loan, new interest rate, APR and terms

When you trade in your car, the cons are:

  • Your trade-in likely won't score full retail value
  • Trading costs money, such as documentation fees and sales tax

If you opt to trade-in, try to determine your vehicle's trade-in value independent of your new car deal. Keeping the deals separate makes things easier. It also gives you space and time to determine if your car has positive equity you can use as a down payment on a new vehicle.

 

Categories: Finance