When many people purchase their automobiles, they will finance the purchase. This simply means that instead of paying the full price for the car all at once, they stretch it out by making payments. This means that they will pay extra in the way of interest, but that is easier than coming up with the money at one time.
In many cases, people do not do the math on the interest they are paying because if they can afford the monthly payments, everything is ok. However, they do not always get the best deal, and they wind up paying a lot more than they should.
There is a new company in town who can help change things for the better. In fact, Ignition Financial out of Austin, Texas has people shouting, “slash my payments” and let’s get it done now! In other words, it is possible to refinance the loan on your automobile under certain circumstances.
It is important, first of all, to understand how most financing deals work in the auto industry. The money that finances cars comes from banking interests and lenders.
The competition if very fierce among the lenders, and they have to have some incentives to win the business of the auto dealerships and used car industry. One way that is very common as far as incentives are concerned is to offer the dealership a piece of the pie. So what happens is that the lender establishes the “floor price.” This is where the basic interest rate starts. Then an additional spiff of some extra interest is available for the dealer, perhaps another 2% to 4%, and the dealer cashes in when the closing occurs.
Usually, when a situation like this occurs, the buyer ends up paying more interest than is necessary. If they buyer would have done business with his or her local bank or credit union, rather than the car dealership as far as financing, they would have been able to get a rate of interest close to the floor rate.
Consequently, Ignition Financial is able, in many cases, to refinance the entire finance package, which results in a much lower interest rate, which reduces car payments. This can lead to quite a nice savings and money is created that can be used for other things.