While the U.S. economy remains strong and stable, many individuals still fear the effects of a future recession, as prices are going up and wages are not rising alongside them. If you, like many others, are looking for ways to save money, you might consider refinancing your car—but how does a possible recession affect this decision?
Lower Your Interest Rate
In an attempt to curb spending and lessen the effects of inflation, the Federal Reserve often increases interest rates sometimes contributing to a recession. Later in the recession, interest rates typically fall to stimulate the economy. If you originally financed a car during a high-interest period, refinancing later in a recession may help bring your payments down. This can also work if you had poor credit when you initially purchased the vehicle but have since worked to improve it.
Extend Your Term
If your monthly payments are becoming too much to handle, you can refinance your current loan to pay less over a longer term. Although this means paying more interest over a longer period of time, it is better than missing a payment and losing your car. It can be a good strategy if a recession hits and you find your budget shrinking.
Minimize Your Debt
It is in your best interest to pay off as much debt on your vehicle as possible before the recession hits. If interest rates skyrocket and your car’s equity drops, it can mean trouble for your monthly payments. If you are able to pay off a little extra each month, it can make a big difference in the long run.
Make Maintenance a Priority
Although not related to refinancing your vehicle, handling vehicle maintenance before the worst of a recession can help you save money. During a recession, many shops see supply chain issues and either can’t get parts in or charge more for their services. Make sure any major maintenance problems are solved ahead of time to avoid larger payments.
Make Smart Refinancing Decisions
Gravity Lending makes it simple for you to refinance and find the best terms for your needs during a recession. We offer a quick auto refinancing process with experts who are ready to help you through every step. Contact us today to get started.