So you took an auto loan and would like to change some things about it — just know that it is normal. Having the loan does not mean you signed yourself to a life sentence. If things around you change, either by improving financially or by having unexpected financial constraints, you are free to seek a better loan. However, before rushing into refinancing your auto loan, evaluate whether it is the right move or not.
The good thing about refinancing is that you can do it any time, even before submitting your first loan repayment. All you need to do is to meet all the requirements of the new car loan.
In a nutshell, this is what you require to refinance your auto loan:
- A new auto loan with better terms than what you already have
- Information concerning the current loan: the lender’s name, contacts, loan balance, and your account
- Details of the car: its model, make, year of production, and VIN
- Evidence that you can comfortably repay everything including tax returns and pay stubs
Once you have all these in place, it is time to ask yourself if refinancing makes sense for you.
Good Reasons for Refinancing Your Auto Loan
1. A Chance to Pay Low Interest Rates
If your new lender is offering lower rates than your current one, then this is a perfect reason for you to refinance. With a cheaper loan, it means the total cost of your car decreases as well. After all, the interest rate forms part of monthly instalments you are expected to pay.
Therefore, if you realize that you can refinance your auto loan and get better terms, then do it as early as you can. It is a good way to improve your monthly cash flow management.
2. To Reduce Your Monthly Payment
You may be thinking that you made an uninformed financial decision when taking your current auto loan. Well, we all do that sometimes. Do not feel shy to refinance your car loan to reduce monthly instalments. You can stretch the repayment period from maybe 24 months to 36 months or to whatever period you feel more comfortable.
While decreasing your monthly payments is a good thing since your burden is reduced, you will end up paying more money for the total loan. Well, it’s a small sacrifice you pay to off-set the situation.
3. To Take Advantage of Improved Credit Scores
Your credit score dictates the terms you get when borrowing any loan. Did your credit scores ruin your chance to get favorable terms? All is not lost. If your scores improve as you continue paying the loan, you have a good reason to refinance it and get better terms. Some of the benefits you might get include lower interest rate, remover of a consignor, and a lock-in low fixed rate.
If you want to improve your credit scores, pay your installments in time. Sometimes it only requires your one year of faithfulness. Keep checking if your scores are changing, and once they rise enough to give you a better loan, consider refinancing.
4. If Your Car Lease Is Ending and You Desire to Change Ownership
When you are leasing a car, there is always an option to buy it at the end of the lease. Therefore, if refinancing your car loan makes it easy for you to buy it, then you are on the right move. Before you fully settle for this option, compare the total cost of buying the car, including interest, and that of extending the lease. You should choose the less costly option.
5. To Reduce the Loan Repayment Period
Sometimes when taking a loan feels like a mighty burden that you can’t lift easily. However, as time goes by, the burden might start feeling lighter. Considering refinancing the auto loan and pay it faster would be a great approach. Paying your loan within a shorter period reduces the total cost of the car since the overall interest amount will decrease.
Are you contemplating refinancing your auto loan online?
If any of the reasons named above is making you consider refinancing your auto loan, then know you are on the right move.
Begin your auto refinancing with SCCU wherever you are, because they offer online services. Call them over the phone or apply online, and you will get approval within a few minutes. It is easy, quick, and convenient.