How To Save A Ton Of Money By Refinancing Your Car Loan
Do you want to save money? Who doesn’t! Buying a new car is exciting, but even if you got a great deal, the monthly repayments can still be quite high. If you want to reduce your monthly payments, one of the best things you can do is refinance your car loan.
In this blog article we’re going to show you why refinancing your car loan is a great idea, and how you can pull it off. If you have any questions or need help, you can contact our friendly any time by clicking here. Let’s get into it!
How to reduce your payments.
Many cay buyers are on the lookout for ways to reduce their monthly car payments and increase their savings. The good news is, car refinancing is becoming more available to customers and gives everyday consumers the opportunity to switch loans and get a better interest rate, which frees up money for other financial responsibilities.
It doesn't matter of your financial condition has improved or not — you can still consider refinancing your car. Even if you can’t get a favourable rate, you can still score one on better terms. Here’s how it works…
What is car refinancing?
So what exactly is car refinancing? It’s when you take out a new loan to pay off the balance of your existing one. When you refinance your car, you borrow cash against the value of your vehicle, and you can then use this cash to pay off your existing payments.
The instalments are in fixed monthly payments and spread over some time, usually some years. When searching for a new car loan, just make sure that the terms are favourable to your needs.
The term and the rates will vary from lender to lender, and that’s why you need to do your homework and compare different lenders and their terms and rates.
Should you refinance your car loan?
Before you refinance your auto loan, make sure it fits your financial situation. You can use calculators to compare your current repayments to a new one, and see how swapping interest rates can affect your monthly payment and overall interest.
There are several reasons to refinance your loan.
If any of these apply to you, you should consider refinancing.
Your credit score has increased since you got your original car loan.
There are competing lenders with better financing terms.
Your monthly repayments are more than you can afford.
Your current loan’s terms prohibit you from making extra payments to pay it off faster.
A few reasons you wouldn’t refinance.
On the flip side, there are a few situations where refinancing won’t benefit you.
If the car you are paying for is over 10 years old.
If you have repaid most of your current car loan.
If your current loan already has great terms.
Every lender has specified requirements when it comes to refinancing, and applying for a new loan can sometimes be listed on your credit history, so make sure it’s worth it.
Carefully look at all the options.
In many cases, there are almost no downsides to refinancing aside from some paperwork (which people like us can do for you). You can save money, get better terms and pay off your car sooner.
But before signing anything, make sure you’ve considered all the options and the less-obvious fine print or terms. You don’t want to jump at an attractive offer, just to find out it actually hurts you down the line.
When you are sure that refinancing your car will profit your financial situation, you can comfortably take the necessary steps to enhance your financial health.
What type of refinancing is available?
To get the most out of refinancing your car loan, consider the various types which vary based on your scenario. For example, if you are employed, self-employed, have bad credit etc. Here are some options:
Secured Car Loans
As the name suggests, your car secures this auto credit. Typically, this credit has a lower interest rate because of the security. There is, however, a downside to this advance. If you repeatedly fail to make the repayments, the lender can technically seize the car and sell it to reclaim their money (in a worst-case scenario).
Unsecured Car Loans
Unsecured car financing is the opposite of secured credits. With this financing, you can purchase a new or used car of your liking. Sometimes referred to as personal loans, they are more flexible but usually have higher interest rates since the lender takes more risk with no security. Qualifying this type of credit is naturally more difficult because of the increased lender risk, and you need to have a higher credit score for this.
Pros and cons of refinancing.
Like many financial decisions, there are several benefits and drawbacks to refinancing a car loan.
Advantages
You could negotiate a reduced interest rate which eventually helps you save much more.
A new lender could grant you a reduced interest rate in refinancing a car advance than your present lender.
Car refinances spread out your repayment over a lengthier term which limits your repayments.
If you have a guarantor, refinancing a car credit allows you to remove your guarantor.
With car refinancing, you are more flexible in choosing the type of advance you take.
Disadvantages
The research and refinancing process can be time-consuming if you do it yourself. By working with someone like Naked Loans, we can make the process fast, easy and stress-free.
With car refinancing, you may be liable to any extra exit or entry fees for certain credits.
When you get an auto-advance with a more extended repayment plan, you may end up paying more overall interest.
Can I refinance my car loan if I have bad credit?
Yes! If you even if you have bad credit, you can still refinance or get a car loan. You just need to have made timely payments for at least 12 months of your current loan. Basically, it proves to lenders that you have learned from your mistakes and allows you to negotiate a more suitable car credit deal.
You can also trade-in your current car to pay off your existing bad credit car loan and finance your replacement car. Whichever way you opt for, ensure you thoroughly research your options before you apply. Note that declined applications will negatively affect your credit score.
At Naked Loans, we specialise in bad credit car loans and help give people a second chance. If you have bad credit, get in touch with our team and we will explain your options to help you get approved, fast.
Who actually does the car refinancing?
To refinance your car loan you’ll need to go to a bank or a car loan broker that is licensed to deal with vehicles. We suggest going to someone who specialises in car finance, like Naked Loans. We’ve helped thousands of Australians finance their cars, even if they have bad credit.
Our team’s wealth of experience and knowledge puts us ahead of the pack. We are able to give you access to over 30 lenders (some of which aren’t even available to the public) and find you the best deal. Whatever your needs, we can support you through the entire process.
How to Get Started
If you’ve read this far, you understand the benefits of refinancing and you’d like to get started, contact our team today. Not only will we give you access to 30+ lenders, but we will also talk you through the entire process, explain all of your options in detail, and help you apply for the right loan.
Once you qualify for the new car loan, your new lender will offset your existing car loan and you’ll have lower repayments and better terms. It’s a win all around!
The cherry on top? We get paid from the lender, so it costs you nothing.