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Posted in Auto Loans
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Question By
chrisg750

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When I refinance my Honda auto loan, should I be looking for a shorter term than the original loan?
I have a 6 year (72 months) loan and interest rate is 5.4%. Payoff amount is $13,500 right now. My credit was not great at the time, but it's much improved. So should I be looking for a shorter term loan like 36-48 months (if affordable) or would it be a better idea to look for a 60 month refinance? I'm stumped and cannot really find quite the answer I'm looking for. Any help would be much appreciated.

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If affordable, then go with the shorter term. Also keep in mind that the lender will tell you how long they are willing to issue the loan, they will want to keep the loan above water, meaning that you will owe less on the auto than what it is worth and if they extend the loan too long, it may eventually go underwater. 5.4% really is not that bad of rate, so unless your credit is excellent now you may want to wait until your are in the Excellent range before you try to beat that rate.

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I did reply but Credit Karma's spam filter stopped it, it will post once they approve it if they are capable of that.

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