Wondering if car loan refinancing is the right choice for you? If any of the following signs resonate with your current situation, then you might find that refinancing your car loan could be beneficial.
Here are 8 signs that refinancing might be in your best interest.
1. Your credit score has improved
Having a low credit score when you secured your car loan likely resulted in a higher interest rate. If your credit score has improved due to consistent repayments and financial management, refinancing could help you secure a more favourable interest rate now.
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. It's been over a year since you started your loan
A year or more of consistent payments can reflect positively on your creditworthiness. If you're past this milestone, car loan refinancing could be more advantageous, as lenders may offer better terms given your proven track record.
Since a car's value generally depreciates, it's wise to consider refinancing earlier rather than later, to avoid a situation where you owe more than the car's worth.
3. Interest rates have dropped
Current market conditions may offer lower interest rates than when you first secured your loan. Refinancing could allow you to take advantage of these lower rates, potentially reducing your monthly payments.
Be mindful of any fees associated with refinancing and weigh them against the potential savings.
4. Your financial circumstances have improved
An improved financial situation may mean you're now looking to reduce your loan term with larger payments, or you might prefer the flexibility to make additional repayments without penalty.
Combining a shorter loan term with a lower interest rate through refinancing could lead to substantial savings over the life of your loan.
5. You're seeking different loan features
Your needs from a car loan may have evolved or perhaps weren't fully met due to previous credit limitations. Refinancing can allow you to tailor your loan features to better suit your current situation.
Features you might consider with a refinance:
- Flexible repayment options
- The choice between fixed and variable interest rates
- A redraw facility or offset account
6. Your budget has tightened
If you're finding it challenging to keep up with your current repayments due to a change in circumstances, refinancing could help you obtain a loan with lower payments. While this might extend the loan term and increase the total interest paid, it can also provide immediate financial relief.
Estimating your refinanced car loan
Utilising a car loan calculator can give you a clearer picture of what your refinanced loan might look like. Input the estimated conditions of a new loan and compare them with your current one to see potential savings.
7. Dissatisfaction with your current lender
If your current lender's service is lacking, whether it's poor customer support or a lack of modern banking features, refinancing can provide an opportunity to switch to a provider that better meets your expectations and needs.
8. Changes in your guarantor situation
Refinancing can also be a strategic move if you wish to release a guarantor from your loan. This could potentially protect their financial wellbeing and relieve any associated stress.
Taking your guarantor off your car loan will give them peace of mind knowing that they won't be responsible for your loan.
Speak with the car refinance professionals
Rapid Finance has been assisting clients in securing more advantageous car loans for years. Don't let the idea of refinancing intimidate you; our experts are here to guide you through each step.
You don't have to be stuck with an unsatisfactory car loan; better options might be just around the corner.
Empower yourself with knowledge and take control of your car loan, consider applying for car loan refinancing today.
Learn More: Is Car Loan Refinancing Right for Me?