Refinancing a Car Loan
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Refinancing a Car Loan
Please note that refinancing a car loan is only possible if you have a good credit score. We will not be able to refinance your auto loan with a subprime lender.
Car loan refinancing is a useful tool to reframe your financial situation. Whether you’re looking to buy another car or want to change something about your current loan, refinancing is one way to do it.
It isn’t a one-size-fits-all solution though. Our auto loan team will outline the basics of car loan refinancing in so you can make a more informed decision about whether it’s right for you.
When is Car Loan Refinancing Used?
Auto loan refinancing means replacing your existing loan with a new one. It could be for a variety of reasons, including:
Reducing the amount of the loan: If you have equity in your car, you can reduce loan payments by reducing the amount you borrow. This can also be useful if the loan is becoming unaffordable.
Changing the loan term: Refinancing is also a viable way to extend or shorten the loan term. If you want to pay the loan off faster, you can refinance to shorten the term with higher monthly payments. If you want lower monthly payments, extending the term can achieve that.
Lower interest rates: If rates have dropped significantly since you took out your loan, refinancing can lower them. This is a viable option if you have moved from subprime status to improving your credit score.
You need to free up money each month: If you’re finding the loan difficult to manage, refinancing to a lower amount or over a longer term will lower the monthly payments.
Removing a Co-signer: Another common reason for auto loan refinancing in Burford is to remove a co-signer. That could be because of a breakdown in relations, because you no longer need one and you want to free them of the burden or something else entirely. Going it alone is an excellent reason to refinance!
Your Credit Score Has Improved: If your current loan is a bad credit auto loan and you have improved your credit score so you’re now in ‘good’ territory, that can be a good time to a refinance car loan.
As long as your current loan doesn’t have early settlement fees or anything else that cost you money, switching to a standard auto loan should work out much cheaper.
How to Refinance a Car Loan
The auto loan refinancing process is very straightforward. You need to research your options depending on what you want or need, to do.
It’s just the same as applying for an auto loan in the very beginning. Create a budget so you can check how much you can afford, get your down payment together, check your credit score, research the auto loan market, and get prequalified when you find a deal you like.
You’ll need proof of your income, of your outgoings, bank statements, wage statements or stubs, and proof of investments and any other income. The more proof you have of your financial position, the faster the process goes.
Is Car Loan Refinancing a Good Idea?
Auto loan financing can be a good idea. If you need to change the terms of your current loan or are finding it difficult to afford, perhaps yes.
Much will depend on your personal situation but if you want to achieve one of those goals above, you should consider it.
It isn’t for everyone though so make sure to explore all your options before you proceed. Do as much research as you can to see what’s possible and what’s not and see where you stand.