How does re-financing work, i have a 18 percent rate on my car loan..help!!!?

Be careful about getting re-financed.

When you refinance anything, they give you a new loan for more money, a lower rate and the new loan will be extended for few years - so you have lower payments. And here is the catch: They will give you a lump sum of cash - the money equals the difference between what your current car loan is and the new car loan is (because it will be more) - to spend on anything you want.

See, this gets them to make sure you pay the loan for more years and they earn more money off your interest!

The key is to take the lump sum and pay it back into the loan - which will lower that difference back down to your existing loan amount, but still give you lower rates.

OKAY - HERE IS THE ANSWER TO YOUR FOLLOW UP QUESTION:

If your loan is for $1,000.00, you refinance your $1,000.00 loan - not including interest. Think of interest as a parasite that latches onto your loan - it needs to be fed too. Actually, interest is the money you pay the lender for lending you the money you don%26#039;t have. It%26#039;s their long term %26quot;fee%26quot; in a sense. That is the whole point of refinancing - to pay less interest in the long run... that is why they will often times offer you a larger loan than the original loan amount you have... because if they offer you a lower interest rate, they won%26#039;t make as much money... but if they give you a larger loan - which gives you a few extra thousand dollars, now you have to pay back the lower interest rate and the few extra thousand dollars... that%26#039;s why I mentioned putting that extra money right back into the loan to pay it back - do not use it.

Also, if you ever want to make an extra payment to your loan, after you%26#039;ve paid that particular month off, you need to call the lender and specify that you want it applied to the principal (the actual loan - not have interest taken out)... otherwise, they just apply it to the future months, with interest taken out. You don%26#039;t worry about paying for a few months, but you also pay interest. People like to try and make a few extra payments a year - applied to the principal - because it knocks down the actual loan amount, and you pay less interest in the long run.

does this make sense?

How does re-financing work, i have a 18 percent rate on my car loan..help!!!?

Go to your bank and ask them if you can refinance your car. To get such a high rate, you must have either bad credit, or got ripped off.

How does re-financing work, i have a 18 percent rate on my car loan..help!!!?

You need to sell the car and buy one you can afforded get a used old one with cash. do you know how much you will save by not having a car payment

How does re-financing work, i have a 18 percent rate on my car loan..help!!!?

It sounds like you either have a low FICA score or some company signed you up on a high rate of interest, best go talk to a banker about refinancing, in some case you will owe way over what the car is worth called (up side down in the car business) and if that be the facts you will just have to pay your way out...

Good luck,