When deciding on refinancing your car loan you need to take into consideration the the pro’s and con’s to determine if you will benefit from the decision to refinance. You need to consider reasons behind why you may want to refinance a car loan:
Reasons To Refinance – The Pro’s and Con’s
It’s easy to get caught up in the excitement of buying a new car and many people will choose the easiest financing option available to them at the time. Unfortunately, many people are rushed into a car loan offered by a car dealer without comparing loans or seeing what other financing options are available to them.
This could mean you end up paying a higher interest rate, additional insurances or even being placed into a loan product that is not suitable to your individual needs.
By taking into consideration the costs involved with refinancing, you need to ensure any savings gained outweigh your current loan situation.
Change in working living arrangements
If your personal situation changes, refinancing your car loan could be a suitable option. For many, a change in job, relationship status, addition to the family could be a reason to explore refinancing a car loan. This could reduce your monthly commitment without having to downgrade your vehicle
End of Current Loan Contract
If you structured your current car loan with a residual or balloon/lump sum payment , you may have an amount due by the lender to complete the loan contract. If you’re wanting to keep the vehicle it is possible to refinance the balloon amount over an extended term.
You need to consider some factors in refinancing a balloon repayment such as the vehicle is older than when first purchased so you may not achieve the same interest rate or answer from the lender or interest rates may have increased since purchase. These need to be taken into consideration to determine whether it is suitable to your in refinancing your car loan.
As you can see above there can be factors that determine reasons to refinance your car loan, however it is important to consider your needs and reasons behind refinancing prior to commencing a new loan.
iCREDIT provide an obligation free service to help you decide if refinancing your car loan is suitable to you needs.
This article contains information on refinancing your car loan.
This information provided is a guide only. It should not be treated as financial advice and does not take into account your personal circumstances, financial needs or loan requirements. If you have any specific questions about financial matters or government legislation, you should consult an appropriately qualified professional or government department. iCREDIT endeavours to ensure the information is accurate at time of publication, however cannot guarantee the ongoing accuracy this information.