Car loans are the most widely applied for loan in the financial markets of the entire world. They are cheaper when compared to personal loans as the financier minimizes the risk by keeping the car on his name until the loan is paid off.
The availability of collateral always reduces the cost of the loan and in the case of getting a car financed; your vehicle is the ultimate collateral.
Although car loans are cheaper and easier to get, many people also look to get their car refinanced to further reduce their cost of the loan. Let us see how car refinance can benefit you further in an already win win situation.
Car refinancing is always about triggering the button at the right time. The refinancing option can only benefit you if you make the move at the right time.
Car refinance benefits:
• If your credit rating improves from the time you got your car financed, consider car refinance.
• You may end up getting a better deal on a lower interest rate.
• Your improved credit rating can benefit you even in the middle of a financial plan.
• Why pay higher rates when you are now eligible to pay lower.
• If interest rates fall from the time you got your car financed, consider refinancing.
Remember, interest rates define the cost of a loan and a reduction in interest rates can be beneficial. In case you have a fixed interest rate clause, refinancing the loan to save huge amounts of money can be your option.
Few banks may intend to increase your financing period in this situation but in case there is no early payment penalty, you can always opt to pay back the loan earlier and save even more.
Car refinance is not as difficult as it may seem. Once you have done all your calculations and you are sure that refinancing can help save you a handsome sum of money, all you need is a lender who is willing to pay off the outstanding amount that you owe to your current financier and is willing to offer this amount at a relatively cheaper rate.
The banks, financial institutes and even the car dealers offer such facilities. They of course take into account the amount that is owed and the condition of the car that has to be refinanced.
In certain cases, when you initiate the refinancing process, your current financier may offer to refinance the same car at prevailing market rates. Refinancing a used car can also ensure a reduction in the cost of a loan.
Used cars are available at lower interest rates for two main reasons:
• The dealers buy used cars at minimal cost and once they agree to finance it, they are actually making a lot of profit from the deal.
• The car always serves as collateral, ensuring no risk for the dealer.
Used cars can also be financed through a bank or any other institute. All these institutes finance used cars at relatively lesser rates as compared to new cars.
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