Vehicle refinancing is for people that do not buy their cars for cash. Car loans are a good way to own a ride when you do not have all the cash that you need to buy a car outright. However, your financial conditions may deteriorate over the period of the loan, making you seek to refinance to free up some cash. Here are 5 valuable tips for applying for vehicle refinancing and making sure you get the best deal.
- Your Refinance Loan Should Come At A Lower Rate Than Your Original Loan
For you to experience a significant drop in your monthly repayments, the vehicle refinancing loan must come with a lower rate than the original loan. Loans that are of a high rate or similar rate to the original but extend the period do not give you any benefits. Shop around for the best rates in the market before settling on any refinance deals, or get all the help you need in one place from Carfin.
- Where Possible Avoid Extending The Term Of Your Loan
People are often tempted to extend the term of their initial loan by taking a refinance over a longer duration. However, even with the significant drop in monthly payments, you end up paying more due to the interest over the extended period. Unless you are in a really tight spot financially, it makes sense to avoid long extensions.
- First Improve Your Credit Rating
If you have had several negatives in your credit score, you should improve this situation before considering vehicle refinancing. A simple way of ensuring that your credit rating is going up is by paying all your car loan installments on time. The other way is by taking small credits using your credit card and paying them on time. A good credit score is the first shot to the best loan rates in the market as it gives the lenders confidence that you are likely to pay for the loan.
- Timing Is Everything
Timing is very important when considering vehicle refinance. The first thing you have to look at is if the rates have lowered. Take advantage of lower rates to save some money on your car loan. The second area to check is the amount of loan owed versus the amount of money that you have paid up. It is desirable to seek refinancing when the value of your car is higher than the amount owed. This is likely to give you good rates.
- Vehicle Refinancing For Some Extra Cash
If you are financially compromised at the moment, but there are prospects of bouncing back soon, vehicle refinancing can bail you out. You could free up some cash off your monthly repayments or buy off a lease if you had leased the car. Find out about your vehicle refinancing options from Carfin.