Getting a car loan is very important for a lot of Australians. People everywhere need reliable transport for work, organising family life, and leisure.
If you had bad credit when you got your car loan, you may not have gotten a great deal. That's where car loan refinancing can be really helpful.
If you've been repaying your car loan without any problems, you may be able to refinance the loan so that you get a better deal or different features that better suit your needs.
Here's our guide to refinancing your car loan.
The Benefits of refinancing
There are many potential benefits of refinancing your car loan. Depending on your circumstances, it's possible that you can end up saving quite a bit of money, or you could make the loan more suitable for your current situation.
Some of the benefits of refinancing include:
- Lower interest rates – If you had bad credit before and you've made your repayments without any problems, you may now be able to get a loan at a lower interest rate.
- More suitable loan features – You may be able to get different loan features that suit you better than your original loan features, such as early payout, or fixed or variable interest rate.
- Lower repayments – If your circumstances change, refinancing your loan could allow you to make smaller repayments over a longer loan term so you're better able to afford them.
Refinancing your loan gives you greater flexibility and control over the kind of loan you want and how much it will cost you.
Tips for refinancing your car loan
While there are many benefits of refinancing your car loan, you need to make sure you do it the right way. Here are some tips to help you get the most out of car refinancing:
When: The ideal time to refinance your car loan is after one year of successfully making repayments. This is because a year of making repayments on time will look good to financiers. So now you might have more loan options than you did when you originally got the loan.
How: You can apply for refinancing directly with the new lender you want to change to after researching all your options. You can also go to a finance broker to get help with refinancing. They will be able to investigate your loan options to find you a new loan that will better suit your needs than your current loan. Finance brokers have access to a wide range of finance products, some of which you may not be aware of.
Compare the costs: If you are refinancing your car loan to get a better deal, then you need to do some calculations to make sure you'll be saving money. Refinancing your car loan may mean having to pay exit fees for the old loan and setup costs for the new loan. Make sure that the new loan will save you enough money to make up for these costs.
What do you want to get from car loan refinancing?
Refinancing your car loan could save you a significant amount of money, potentially even thousands of dollars. But you need to know what you want to get from your new car loan so that you get benefits of refinancing that you want.
If you want to refinance your car loan so that you save money on it, then make sure that any fees associated with refinancing are not larger than the potential savings.
If your circumstances have changed since you got your car loan, you may want to make the repayments smaller so that they're easier to afford.
Refinancing your loan to get a lower interest rate will give you smaller repayment amounts, but you can also reduce your repayments by extending your loan term. But remember: a longer loan term could mean a higher total cost. If you extend your loan term, you will likely have to pay more in total interest payments.
Whatever the reason is, refinancing your car loan could give you greater flexibility and control over your finances.
Whether you're after savings, different loan features, or lower repayments, Rapid Finance could help you find a new car loan that suits your needs. We've helped many Australian families, businesses, and individuals do just that.
Are you ready to take control of your car loan? Apply for refinancing today.