Refinancing a Car Loan: Is it Possible?A limited number of lenders offer car refinance options.
At Auto Car Loans, we can help with refinancing, but there are some things to consider first.
Why are you wanting to refinance?
When you first enter into a car loan agreement, you commit to specific terms that fit your current financial situation. But as time goes by, your circumstances may change which makes you wonder if refinancing will get you a better deal than what you already have.
Before looking into refinancing, you should ask yourself what you want to achieve.
- Do you want lower repayments?
Unexpected bills or a change in employment may mean that cashflow has become a bit tight and you need to reduce your monthly outgoings. Lengthening the term for lower repayments may help you to take away some stress, but you may end up paying more in interest in the long run.
- Do you want to pay your loan off faster?
When your business is doing well or you have had a promotion, you may want to shorten the term to be able to pay the loan off faster.
How does refinancing a car loan work?
When you refinance, the application process is very similar to that of any other loan, but the new loan will completely pay off your existing loan. After the balance has been paid, the old contract with your previous lender should be closed so you can begin making loan payments under the contract terms with the new lender.
What are the benefits of refinancing?
- Lower interest rates
Having a loan at a lower interest rate means that you could pay less overall even when taking fees into consideration. The sooner you are able to move to a better interest rate, the less money you will have to pay since you pay more on interest earlier on.
- Lower monthly repayments
Extending the term of your loan enables you to lower monthly repayments and have more cashflow each month.
- Ability to get better loan terms
When you first took out your car loan, you may have required a co-signer or guarantor to obtain approval. Once your credit rating improves after making regular loan payments then it’s possible that this person can be removed, or you can qualify for a better loan rate.
What else should I know?
Sometimes fees and setup costs associated with refinancing can make the process not worth it. It’s a good idea to speak to a professional about your situation so they can give you advice on the best solution to fit your needs.
If you would like to find out if refinancing your car loan is the right choice for you, please feel free to give our team at Auto Car Loans a call on 1300 301 051 or contact us.
DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.