Why should I refinance my current car loan?
If you have decided to look into your options when it comes to automotive refinancing, then it is a good idea to assess your situation to see if making this move towards a new loan, to pay off your existing vehicle loan, is going to bring you much of a benefit. There are circumstances in which it makes sense to apply for refinancing on your vehicle, and it very much depends on a combination of factors as to how much benefit you would receive for taking this decision.
You should firstly check whether interest rates have fallen since you took out your original loan and if this is the case, and then you may well save on your monthly outgoings by refinancing. For instance, at this point in time, if your current finance arrangement is paid back with more than 6% interest, you could save money by refinancing.
It may be that your financial position has improved over time, and that there may be better finance terms available to you than when you took out the original loan. If your credit score has improved, for instance, then lenders may be willing to give you a slightly lower interest rate on your finance. However, this is not always the case, and this is where it pays to check dealer by dealer to see what is on offer.
With the cost of living becoming increasingly expensive, any savings at all can help you if your budget has become overstretched. If you are finding it difficult to manage financially, then an automotive refinancing deal that saves you money is an excellent choice to help you manage your finances and get through a difficult patch.
Some dealers offer a payment break at the start of a new financing deal, and this can help pay for other outstanding bills, freeing up some cash to fall back on to get you out of a financial tight spot for a few months. Again, you would need to check whether a repayment break is on offer on a deal by deal basis, and whether the entire deal package gives you better terms and conditions than the deal you already have in the long term.
A new vehicle financing agreement can help you to buy your car outright, if the lease on it is about to run out, and you have fulfilled all of the terms and conditions under the lease agreement. Often, f this is the case, you might be offered the opportunity to buy the vehicle, and you would need to use automotive refinancing to do this.