Refinancing your car means replacing your current car loan with a new loan based on different terms. Usually, the new loan is gotten from a new lender who offers better interest. A lot of people are not aware that they can refinance their car or do not understand the process to do it but car refinancing is quite easy to do. You can directly apply online to an auto refinancing company and get a response within a day.
Benefits of Car Refinancing
There are several benefits to refinancing your car, some of them are:
1.) To lower your interest rate: Refinancing your car is the best way to lower your interest rate. If you previously had no credit score, you can refinance your car after a few years for a lower interest rate. With reduced interest, you will be able to pay off your car loan in a shorter time.
2.) To get money: Sometimes people refinance their cars to get money for other projects. If you owe less than your vehicle is worth, you can refinance for some spare cash. Let’s assume you own a 4-year old car currently worth $10000, and you owe $6000. The best thing to do is to refinance the vehicle for an $8000 loan. This way you still owe less than your car’s’ worth and have $2000 to use for something else.
3.) To lower your payment: A common question people ask about car loan is “what are some ways I can slash my payments?”. While there are several options, refinancing is by far one of the easiest. When you refinance, you have the choice of extending your car loan. So if you have two years of payment left, you can stretch it out to four years and reduce your expenses. Extending your payment period may affect your interest rate, but it will reduce your financial strain especially in times of emergency like medical expenses
4.) To change lenders: If your current lender is hard to get in touch with or not making your payment information available, refinancing can help you get a better lender that will attend to your needs more carefully.
5.) To Change the co-signer on your loan: Refinancing is an easy way to remove or add someone as a co-signer to your loan because it comes with a new contract. Adding a co-signer can be very helpful if you need help paying off a large loan.
What to do Before Car Refinancing
1.) Get to know your payoff amount and APR (annual percentage rate of charge) from your current lender.
2.) Prepare your vehicle information
4.) Find out if the value of your car is still at the same level so that you don’t end up paying more on your refinance than the car value.
5.) Find out the next time you need to make payment. In some cases, you can skip a month payment if you refinance early.
To save money on car loans check out Ignition Financial, a great refinance loan provider with the best the best rates and flexible payment terms to fit right into your budget.