How do you know if car loan refinancing is the right option for you? If one or more of these signs apply to you and your situation, then you might benefit from refinancing your car loan.
Here are 8 signs that you could benefit from refinancing.
1. You had bad credit when you got your loan
If you had bad credit when you got your car loan, odds are you're paying a pretty high interest rate. But if you've been making your payments on time since then, your credit has probably improved.
With better credit comes more loan options, so you might be able to get a better deal on your car loan now. This is one of the more common reasons for people to choose refinancing.
2. You've been making payments successfully for 12 months
Generally speaking, 12 months after you initially get a car loan is the best time to look at refinancing. This is because 12 months of regular repayments is a good sign to lenders that you are responsible.
Since your car's value will depreciate over time, it's better to get car loan refinancing sooner rather than later. A lender will be less likely to take over the loan if the amount still owing is greater than the value of the car.
3. Your current loan charges high fees or interest
One of the biggest benefits of refinancing your car loan is that you could get a better deal and save money. If your current car loan has a high interest rate or other fees associated with it, then you could benefit from refinancing.
Remember that there may be fees associated with refinancing. Make sure you consider these costs while you are making your decision.
4. Your financial situation has changed
If your financial situation has changed for the better, you may want the freedom to make extra payments or pay the loan out early. You may also want to reduce your loan term so that you make larger repayments over a shorter period of time so that you pay less in total interest on the loan.
If you do this along with getting a lower interest rate, you could save a lot with refinancing.
5. You want different features
Car loans can come with many different features, some of which might suit your needs better than others. If your circumstances have changed since you got your car loan or if your options were limited by bad credit, you might want to refinance to get different features for your loan.
Some feature you might want include:
- Early payout options
- Fixed or variable interest rates
- Redraw facility
6. You're having trouble affording your repayments
If you're having trouble affording your loan repayments because your circumstances have changed, for example, if you lost your job, then you may benefit from refinancing your loan to get smaller repayments.
You may be able to get a lower interest rate loan, depending on your circumstances, but you may also be able to lower your repayments by extending your loan term. That way you'll make smaller repayments for a longer period of time. However, extending your loan term will likely increase the total cost of your loan.
7. You're not happy with your current loan provider
One of the reasons you might choose to refinance your car loan is because you just aren't happy with the service provided by your current lender. Maybe you have to talk to a machine when you call them or their customer service is poor when you do finally speak to a person.
Whatever the reason is, being able to choose a new loan provider is one of the benefits of refinancing your car loan.
8. You had a guarantor that you want to take off your loan
If your lender required you to have someone guarantee your loan for you, then you might want to refinance your loan to have the guarantor removed. Guarantors are usually family members, and mixing family and finances can be stressful.
Taking your guarantor off your car loan will give them peace of mind knowing that they won't be responsible for your loan.
Get help from the car refinance experts
At Rapid Finance, we've been helping our clients get a better deal on their car loans for years. Don't put off refinancing your car loan because it seems difficult; our car loan experts could help you through the whole process.
You don't need to settle for a bad car loan; you could get a much better deal.
Take control of your of your car loan today, apply for car refinancing.