Have you noticed better car loan rates and want to make a switch? You can refinance your car loan – learn how.
If you are unhappy with your current car loan arrangement or have had a change in financial circumstances, refinancing your car loan may be an option for you. Below are a few of the more common reasons borrows choose to refinance their car loans.
Refinancing your car loan means to switch to another provider, a lender who can provide you with some form of advantage over your current provider. Lower interest rates, better rewards and service, or even convenience could be some of these advantages.
Interest Rates– The main reason to switch loans is to move to a lower rate – be careful of introductory rates that change after a set period.
Fees– New account fees, exit fees, administration fees, late fees and the like are all things that could tally up the costs, and potentially ruin any savings you could see.
Elasticity– Your refinance option should be flexible compared to your current loan. This is in regards to what flexibility is available on late payments, redraws, or other things of that nature. The ability to pay out a loan in full without penalty is something to consider.
Duration– How long are you going to need in order to pay off your new, refinanced car loan? Determine how long or short you require your loan to be before undertaking this process.
Bank Finance – Consider speaking to your current bank as they may provide you with quick competitive finance based on your relationship with them.
Car Lot Finance – This can be an option but tends to be a bit more expensive than other lenders. If you are able to negotiate terms that deliver on what you are looking for, this could be a possibility.
Online Lenders – One of the cheapest options is that of online specialist lenders. They tend to have some of the most competitive loan products available.
Credit Unions/Non-Bank Lenders – These lenders are similar to the banks but generally have lower rates and costs. Consider checking with your local credit union or community bank to compare loans. *Tip – Ask current providers if they will match your new offer, this can save you time and provide you with the benefits you are looking for.
Before applying for any form of credit, it is important to read the terms and conditions carefully. Be clear on all points of the contract and ask for clarification for areas that you don’t understand. In some instances it is good to ask for responses in writing. Be wary of high pressure sales tactics.
Whilst there are numerous reasons why one may consider refinancing their vehicle loan, it is important that you are putting yourself in a better position. One of the best questions to ask yourself when considering a switch – is it worth it. Check this by weighing up all costs and benefits and comparing.
If it is with the same provider, it can be a matter of minutes. If it is with a new provider it is dependent upon their processes but shouldn’t be longer than a normal loan.
This really depends on the financial benefit you are looking to receive.
Yes, as there is collateral attached to this type of loans (being the vehicle) many lenders will consider impaired credit. Be aware rates may not be as competitive to those with no credit impairments.