Is it time for you to refinance your auto loan? In this article, let’s discuss pointers that you should consider about your car loan along with tips on how you can get a better car loan refinancing deal:
Your Car Loan and Personal Credit
If you have acquired your car loan while you still have bad credit, you are most likely paying for a much higher interest rate. How long has it been since you began your bad credit car loan repayment? If you had been paying your car loan for at least six months or longer, you should have made some improvement in your credit score. Of course, this will only be possible if you submitted all your monthly loan payments on time.
To be sure, order a copy of your credit report and check your score. If there has been a significant improvement in your rating, then it is the perfect time for you to consider loan refinancing. Refinancing your bad credit car loan will give you the chance to enjoy lower interest rate and reduce your monthly loan payments. If you still have at least a year left to complete your car loan repayment, then refinancing now can save you hundreds of dollars on interest rate fees alone.
How to Refinance Your Car Loan
You can ask your current lender if it offers a car loan refinancing program. You should also check out refinancing programs offered by other lending companies. This way, you can be sure that you will be given the most affordable car loan deal possible. As soon as your bad credit car loan is refinanced, you will have an easier time paying off your car loan.
Loan refinancing is just like a second loan and it is important to keep up with its repayment to continue improving your credit history. Therefore, you should plan your repayment strategy before refinancing. You may need to make adjustments with your current budget plan to ensure that you can submit your car loan payments on time.
When To Skip Auto Loan Refinancing
Sometimes, auto loan refinancing may not be a smart move. Although you will be able to get a lower rate through refinancing, there are some reasons why you should skip this step and simply continue paying off your original car loan. What are these reasons?
For instance, if you only have a short span of time left before completing your payments, then obviously there is no need for you to refinance. If you can complete your loan payments early, find out how much the pre-payment penalty is and compare the cost with your remaining auto loan payments.
Do you have a plan to sell your car in the next year or so? If yes, you should skip refinancing because you will need to complete your payments before you can sell it. Furthermore, you should check the lender’s requirements before applying for refinancing since most lenders will not allow this step if you owe less than $7,500 in your loan payments.