A lot like real estate, interest rates on car loans can fluctuate. Mostly, it has to do with changing market conditions and your credit score. Refinancing can always be a good option if you are currently paying a higher interest on your car loan.
In a typical car loan refinancing, your vehicle acts as the security, and you pay a lot less each month. Make sure to choose a refinancing option with an extended repayment period, like Valley First Credit Union Auto Loan.
Here’s more on the first-hand benefits of a refinance.
Enjoy Lower Interest Rates
One of the primary reasons to refinance a car loan is to bring down the interest rate. This is more applicable to all those vehicle owners who purchased their car with a poor credit score. As a result, they were offered a high rate of interest.
If you’ve recently checked your credit score and see a noticeable difference, it might be a good time to refinance your car loan. However, pay attention to the closing costs. If the rate of refinancing and your current rate aren’t much different, closing costs can drastically bring down the benefits.
Use an online auto loan calculator or request a quote. This will help you to easily find out how much you can save from a refinance before you take the plunge.
Ease Your Burden With Extended Repay Period
With the revised interest rates, you pay a lot less every month towards your car loan. However, if the car refinancing offers extended periods for loan closure, the monthly payment further gets reduced. In other words, you will have a lot less to worry about and more money for savings.
Opt For Better Customer Service Despite poor customer service, automobile owners are forced to continue with their old lender. Car refinancing is a wonderful opportunity to shift to a better lender known for good customer service and on-demand support. In case you’re often hit with high charges following a delay in payment, that alone can be a valid reason to consider refinancing.
You Can Borrow Against the Value of Your Vehicle
Do you know the current market value of your car? Refinancing allows you to borrow money against a vehicle’s market value.
For instance, a car owner has been making regular payments and owes $4000. Considering the current market value of the car is $15000, one can refinance the existing car loan and use the extra $11,000 for other things like home repairs or credit card repayment.
Get Sole Ownership
Sometimes, a lender requires a cosigner for a car loan, especially when the earnings of the principal borrower are less than what’s needed. However, when one grows financially stable, the cosigner does not need to co-own the vehicle. A car refinancing can help you become the sole owner of the vehicle. Make sure the certificate of title for the vehicle reflects the change.
Closing Thoughts
Undeniably, car loan refinancing promises multiple perks. All you need to know is the right time to call the shots. Primarily, there are two major factors to consider. Firstly, there’s an initial lock-in period where you can’t leave your current lender without a penalty. Refer to your loan documents to know more about early payoff fees. When refinancing your car loan, you must speak to your new lender about the terms and conditions of early off.
Secondly, if the market value of your car is lower than what you owe, it can be tricky to qualify for refinancing. In that case, you might have to pay off the balance before securing a new loan.
If you’ve been contemplating refinancing your car loan, no time is as good as now. However, if you’re still unsure, you can always ask for a refinance quote from the company. It will help you make an informed decision and offer a perspective of things ahead.
