Tips On Refinancing Your Car Loan

Is the interest rate of your current auto loan too much to handle? Are your monthly payments too high? If you answered yes to these questions, it might be better for you to talk to your lender about refinancing your current auto loan. Availing an auto refinancing loan would secure a new loan to the existing balance of your original loan with your car being used as collateral. This refinancing process would give you a new loan with a new contract which might be actually better for you in the long run. Try to take on our simple tips on how to maximize your refinancing. 

Lower Monthly Interest Rate

There are a lot of ways on how to improve your credit score such as making on time payments, closely monitoring your debts,  and successfully paying off a loan. When done right, your current financial obligations can be managed better and  your creditworthiness will increase. This improvement will reflect  on your credit line consequently leading to a higher credit score which you can use to negotiate a lower interest rate and a much lower monthly payment.

Review What is Left of Your Current Loan

Knowing how many payments are left and the financial details of your loan will help you in the refinancing process. It pays to study when it concerns a big life decision such as refinancing your loan. Do not correct a mistake with another mistake due to lack of awareness on your part.

Increase the Duration of the Term of the Refinanced Loan

If the term of your original loan is short, increasing the duration can be another alternative that you should consider. Extending the duration of the loan may not be the ideal solution but that would also mean a much lower monthly payment. As mentioned, extending a loan term has a downside. A longer loan duration would likely end up in you paying a whole lot more in interest alone. To add, you also add the risk of acquiring a longer negative equity on your car loan especially if the interest rates are too much. In the long run, you’ll wind up saving more money if you play your cards correctly.

Check Out the Requirements to Qualify for Refinancing

Lenders have different requirements for every debtor. To their eyes, you are always a risk which leads to them imposing higher qualifications. The car you want to refinance generally should not be more than 7 years old  and should not be used for commercial purposes. If you still have a relatively high amount of payments to be made, some lenders might not consider you at all. These are just some of the general rules in applying for a refinancing loan.

Study the Auto-Finance Market

Visit every lender in your area and choose the offer (possible) that best suits your financial capability. You may inquire about the average interest rate used in loans and use that information as basis in negotiating to your prospective lenders. 

If your monthly payments seem to be a financial burden on your current status, refinancing is a smart idea to ease the burden. If you are in the middle of the monthly payments of your loan, weigh the pros and cons of availing a refinanced loan especially in the financial aspect. 

Learning the basics of car loans can be challenging, especially if you are in dire need of a vehicle right now. New Car Canada is the dealer that understands your needs and provides a variety of auto financing products so that you can acquire the right car for your needs. We provide instant approval regardless of your credit score. Start refinancing TODAY by filling-out our simple online application form. Apply for free and get approved in less than 24 hours!

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