Refinancing is a term that is bounced about a lot and can look attractive. To back up this appeal with prudent judgment, take heed of the following advice. When you have decided that refinancing your car loan is an option, you can contact us for the next steps.
When Is Refinancing Helpful?
If your income has taken a dip, or you need emergency capital, refinancing your car loan could help with this. A more optimistic scenario could be that the credit score applied to your car loan has improved materially, thus making you a candidate for a better deal.
A better deal is a great reason to do refinancing. A lower interest rate means quicker debt settlement or smaller repayments and less total repayment amount.
If you need smaller repayments but don’t qualify for a lower rate, refinancing might give you an extension to the duration of your loan. A 2-year extension will lower your repayments, will free up disposable income and get you through a financial challenge.
Note: This means you will pay more interest in total versus the original loan.
Cash Flow Ease
If your car loan statement shows a lesser amount owed than your vehicle’s current market value, then refinancing is an option.
For instance, if the current market value is $7,000, and the car loan statement shows $4,000 you could refinance for $5,500, giving you $1,500 to be used on a new fence, studies or a medical emergency.
Note: A motor vehicle decreases in value, unlike most properties. Get advice on refinancing your car loan to make sure you don’t reach a point of owing more than what the vehicle is worth.
Research all of the market options and do the projected maths before signing a car refinancing loan. Don’t be tempted to overuse the extended term if you don’t need it. An older car also attracts higher interest rates than a new car, so be prepared for that outcome. A win-win will be the lowest interest rate plus the shortest loan term your budget can accommodate.
If you want help assessing the best refinancing of new car loan in Byron Bay give Zep Finance a call and let us get the best solution for you.