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Are You Paying Too Much Interest on Your Car Loan?
As your credit improves through making your payments on time, why not take advantage and refinance a newer vehicle at a lower rate?
What is Refinancing?
At a Bell Auto Inc and Carfinance, we make sure to explain things thoroughly and keep them simple.
Refinancing is a car loan involves taking out a new loan to pay off the remainder of your current auto loan. Like your original auto loan, refinancing is secured by your vehicle and paid off in regular installments over a specific period of time. Your new car loan will likely offer a substantially lower interest rate and maybe even more flexibility.
Who can refinance their car loan?
Almost everyone can refinance a car loan if they meet the certain conditions. So, before you apply, you might want to consider the following.
1-) Age of Your Car
When it comes to financing or refinancing a vehicle, it’s age plays a key role.
It’s no secret that cars lose value over time; from the minute you drive it off the lot and every year going forward it will drop in value. Your loan is usually worth more than the vehicle so trade it in before you lose too much value. If your vehicle is getting older you should anticipate more frequent repairs. Is it time to move on to something newer before that happens?
Comparable to the age of the vehicle, a vehicle with high mileage on it may be a reason to consider trading in a vehicle and refinancing a newer, more reliable one.
3-) Vehicle’s Value
Depending on how much the vehicle is worth relative to what you still owe on your current car loan, you may have what is called “negative equity”. Meaning, as mentioned prior, the value of your loan is usually higher than that of your vehicle. If that is the case, the remaining amount will be added to the new car loan but at a lower rate. A down payment will also help in taking care of negative equity.
Why Should You Do Refinancing?
There are many reasons to you should a refinancing.
1-) Lower interest rates.
If you’re aware that rates have dropped since you first got your car loan, or your credit rating has increased (financing a car and making payments on time will definitely do that!) you may want to consider refinancing to get a lower rate and save money over the life of your loan. This is one of the biggest reasons to refinance, as you can potentially save thousands of dollars in interest in the long run.
2-) Your financial situation is better than ever.
If you are starting to earn a higher income, have less debt, and your credit score is improving day by day, you may want to refinance your loan for better terms; your lender may be open to this as your situation improves.
3-) If you have a hard time paying your bills, refinancing also might be good for you.
Another great reason would be if you’re having trouble paying your bills each month, refinancing might still be a good idea to take a lower rate and lighten your debt burden. Even if you can’t get a lower interest rate, you may want to refinance at least to extend the loan term so that you have fewer payments and more time to pay off your balance.
You can refinance for many reasons, upgrade, down grade – we will work to make the best of your current situation.