Getting your dream car is possible through auto loans. But one has to know that the loan they took out doesn’t make them pay more than they should. In cases like this, refinancing can help you meet better loan terms suitable for your budget. This article provides information on car loan refinancing and when to best get it for your car.
Reasons To Refinance
1. You Are Not Fond Of Your Current Lender
One of the main reasons why car owners refinance their loans is when they don’t like the lender. There are many predatory lenders with shady ways of doing business. The company can also turn customers off with rude customer service and disorganization. Sometimes, the lender doesn’t disclose the fees immediately until later on.
Some lenders also tend to sell warranties and other add-ons to make money. A warranty would cost around USD$2,000, and they won’t tell you anything else, only that you’re saving money. Nevertheless, ask the actual price for these add-ons before deciding whether you want them.
If they can’t cut you a better deal, move on to another lender similar to AUTOPAY, who can help you keep your car at a lower rate.
2. You Want A Lower Interest Rate
Some opt to refinance because their life situations have changed, while others want to save more money. If it’s your first time getting a car loan, looking for a reputable lender that can offer you better interest rates is best.
Refinancing will allow you to make lower loan repayments monthly. And it’s practical because paying less for your car will allow you to afford other things.
Here are some reasons why you can get lower interest:
- You’re currently in a period when interest rates are lower than when you first got your car loan.
- Your knowledge of auto lending has increased. Since you already know how to calculate your annual percentage rate (APR), you can now shop for better rates this time.
- Your credit score is improving, and the lender you prefer is likely to see you as creditworthy.
3. Dealership Financing
You might’ve had to get refinancing from a dealership when it’s your first time taking out a car loan. At that time, you didn’t know why the rates were that way, and you might’ve thought it was the norm. But it’s a fact that dealers increase their rates because they work with other businesses. They’ll shop around for lenders on your behalf using the information given.
Depending on who can pay the higher commission, the dealership will introduce you to them. And that lender doesn’t necessarily have to provide better terms for you. There’s nothing wrong if refinancing through the dealership was convenient for you at the time. But now, you can refinance your car when you find better rates.
4. You Want To Shorten The Loan Duration
If you feel your loan statement seems to go on forever, you’re not the first to notice it. Some lenders will give you a few months that appear favorable to you. Calculate how long you need to pay off a loan with the amount you’re providing. It might surprise you how much you need to pay off.
Meanwhile, refinancing allows you to get out of the terms that you find unfavorable. You can research various options that enable you not only to keep the car but also to lower your monthly payment.
Know that a contract doesn’t always have to hold you to an obligation. In this case, you can seek a better lender. You can ask your new lender to help you adjust the loan term. If you’re sure you can pay off the loan faster, then do so. It’ll also help you save at least USD$1,000.
When To Best Get Refinancing
You can refinance anytime you need to, and there’s no rule about how long you have to wait. If you meet the requirements of the lender you want to work with, you can refinance your loan as soon as you want.
You can refinance your loan before you make your first monthly repayment. But know that sometimes, you won’t be able to refinance your loan until you have the proper paperwork. You’ll need to head over to the Division of Motor Vehicles in the state where you live. While it can slow down the process, it’s worth it as long as you’re now negotiating for better loan terms.
A car is a necessity for some people. You can get a car loan to get the vehicle you need immediately. But when the terms you got from a dealership or lender are not in your best interest, you’re free to research to find a better lender with a better loan offer. Refinancing frees the borrower from high-interest terms that don’t work for them.