Combat Inflation and Expand Your Cashflow with Car Loan Refinance
Inflation. It’s easily one of the largest issues impacting Americans today. The annual inflation rate in the United States rose to 8.5% in March 2022, marking the highest increase since December 1981. For many individuals, these high inflation levels are triggering economic hardship.
What Is Inflation and Why Is It So High?
Inflation refers to the rate of increase in prices for everyday living expenses. The higher the inflation rate, the more you are paying for the same goods and services. While some degree of inflation is considered normal – a standard inflation rate of 2% is typically standard – when inflation escalates significantly higher than this figure, it can make it much harder to pay your bills.
Our current inflation surge has primarily been caused by the global supply chain crisis occurring over the last year due to the COVID-19 pandemic. This has created a much higher demand for many goods, causing prices to skyrocket.
Currently, many items are much more expensive than they were a year ago. Inflation has impacted the just about every aspect of life, including:
- Housing costs
- Vehicle prices
- Gas prices
- Energy costs
- Grocery prices
- Costs of common household goods
What Is the Impact of Inflation on Your Day-to-Day Life?
This cost of living increase impacts everyone, but lower income families tend to be hit the hardest. If you are living paycheck to paycheck, these rising prices can place your finances in a very precarious situation.
Unfortunately, most Americans aren’t receiving raises commensurate with the rising inflation rate. This leaves millions of families struggling to figure out how they are going to come up with the money to cover exploding housing costs, skyrocketing vehicle and gas prices, and the rising costs of other necessities such as clothing and groceries.
Car Values Are Rising Exponentially During this Period of High Inflation
Vehicles have been impacted significantly by the rising inflation rates. Due to the supply shortages we’ve seen over the past two years, particularly with computer chips, car values have risen tremendously. The technology used in modern vehicles requires several hundred computer chips to run everything from the infotainment controls to the vehicle’s engine controls to the power seat memory functions. The pandemic has impacted the production of these computer chips, and this has caused the manufacture of many vehicles to stall until these chips become more readily available.
According to a report by Car and Driver, these supply shortages have caused the values of both new and used vehicles to rise exponentially:
- Prices for new vehicles rose 12% in January 2022 compared to January 2021
- Prices for used vehicles were 40.5% higher in January 2022 compared to January 2021
- 82% of new car buyers in January 2022 paid over sticker price for their vehicle, compared to 2.8% of buyers a year ago
Unfortunately, it appears there is no end in sight for these rising car values. Industry experts have estimated that supply won’t reach levels that meet consumer demand until late 2023 or early 2024. So if you’re planning on purchasing a vehicle in the next two years, you can expect prices to remain sky high.
Refinancing Your Car Can Be an Effective Tool to Manage the Impact of Inflation
The value of your car is likely higher than you expect. In many instances, it may even be worth more than when you purchased it. This is particularly true if your vehicle is only a few years old. This provides you with an opportunity to refinance your car loan to pay down other debt.
When you refinance your auto loan, you can borrow off of the current value of the vehicle. In our current circumstances, this may be more than the actual value of your existing loan. As a result, you may be able to borrow more money when you refinance your car and use this surplus money to pay off debt at a higher interest rate. While you’d be adding money onto your car loan, if you receive a lower interest rate than you’re paying on credit card debt, you can save a significant amount of money by paying down these higher interest debts and carrying more money on your car loan.
Let’s look at an example to illustrate this point. You purchased a car for $40,000 two years ago. The car is now potentially worth $45,000, and you still owe $24,000 on your car loan. If you refinanced your car loan for six years at a 5% interest rate, the difference between refinancing for the $24,000 you owe and $27,000 would be an additional $50 on your monthly payment.
By taking out a loan for $27,000 instead of $24,000 when you refinance, you can pay off a $3,000 credit card debt that is likely charging you between 18-25% interest. This will only add $50/month to your car payment, and you’re paying 5% interest on that $3,000 instead of 18-25%. At this drastically lower interest rate, you’ll save a significant amount of money over time.
If your car experienced traditional depreciation and wasn’t worth more than the value of your loan, you couldn’t refinance for more and unlock this savings tool. But because your car’s value has remained so high, there’s less risk for the lender. This means you’re more likely to find a very favorable interest rate than if the value of your car was depreciating steeply like it traditionally does.
iLending Makes Car Loan Refinance Easy and Hassle Free
If you’d like to leverage this opportunity to pay down more expensive debt, iLending can help. With our exclusive You First Approach™, you’re in the driver’s seat throughout the entire process. In addition, our unique approach makes refinancing your auto loan easy and hassle free, ensuring a great experience from start to finish.
You’ll be paired with a personal loan consultant who will spend time with you to understand your goals from refinancing. Once these goals are established, your loan consultant will compare rates for you. We work with a wide network of nationwide and local lenders, making it easy for us to identify the right options to address your specific needs. Your loan consultant will review these options with you and provide the guidance you need to make the right decision. Once you’ve chosen your new loan, we’ll complete all the paperwork for you, making the refinance process as easy as possible.
On average, our customers reduce their interest rate by 7-8% and save approximately $145/month after refinancing their car loan. If you take additional money as part of your refinance, you can use this money to pay down other debt at higher interest rates. However, even if you refinance for the current amount you owe on your loan, this $145/month savings can inject your monthly budget with additional resources needed to combat the rising costs of living caused by rampant inflation.
Apply now to get the process started.
What would you do with an extra $132* in your pocket?
