Is refinancing a car loan worth it?
In this current low-rate environment, refinancing has become common practice for many home loan holders to shave thousands off their mortgage. But is refinancing your car loan a good idea? Let’s take a look at the numbers: Since 2016, there have been eight cuts made to the Reserve Bank of Australia’s (RBA) official cash rate. It now sits at an historic low of 0.10% from 2.00%. The current average variable car loan rate for new and used vehicles sits at 6.68%. When you compare that to the average rate at the same time five years ago, 7.82% - that’s a 1.14% difference. In the case of home loan interest rates, the current average variable rate is 3.30% from 4.72% five years ago. While that is a 1.42% difference, the small margin can make a significant difference because home loans are generally around 25 to 30 years. So the question is, should you refinance your current car loan? We’ve weighed it up.
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