If it seems appropriate, be sure to avoid these common refinancing mistakes so you can maximize your savings, Drawing It Out. While it may seem tempting to switch to a longer-term loan term, it's usually not worth it in the long run. Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We have maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in the measures that they should take next.
Some lenders include an early payment penalty in the car loan agreement for paying off debt early. Be sure to check if your current loan has prepayment penalties, as it could negate any savings you make through refinancing. However, this isn't necessarily a good thing. You'll want to do the calculations, especially if your interest rate won't fall significantly, to determine what your real savings will be. If the refinance loan will simply cost you more money over a longer period of time, it may not be worth doing so.
