Are you upside down in your car loan? Wait, before getting into further details, first, let’s discuss what does the phrase “upside-down” or “underwater” means when talking about auto loan refinancing? This situation occurs when the loan borrower owes more money than the actual worth of their vehicle.
For example, in the case of a car accident, your car is destroyed. And now it is worth nothing more than a few hundred dollars of scrap. You can’t repair this car, but you are left with thousands of dollars to pay to the lender even after getting your insurance aid.
Such an unfortunate situation can also occur without a catastrophic car accident. Say that you are moving to a different city where you don’t need a car at all. In this case, you will have to sell your vehicle to support yourself with the moving expenses. Even though yours is entirely new, you can’t sell it and pay off all the loan debt you owe.
New cars are known to lose value in a blink of an eye. And whatever the case may be, you must pay off the remaining loan.
Keep in mind that your car is also a property like your other assets, and its value rises and falls depending on the market value. If your car is not as popular as it used to be (maybe a new and better model has come out or this model has received backlash from the public); there will be a definite decrease in its value, regardless of how much money you owe on its loan. Other than this, if the vehicle has higher mileage and terrible conditions compared to another same car; its value will decline faster than ever. Moreover, one thing that needs your attention is that regardless of how good your car is (condition-wise); you will never obtain the financing fees and cost of the additional features.
Are you upside-down on your car loan? Refinancing is here to save the day!
In order to get out of your not-so-good loan, you may have the sudden urge to trade your car for another one. Since car dealers have been in this line of work for a long time, they may offer you an attractive deal: use the money from your old car to finance a new car. The reason is that they want to make new sales and increase the trade-in rate. However, don’t rely on such dealers because these offers may worsen your financial situation and put you in more debt.
A better option is to refinance through a reliable company, such as CarLoanRefinancing. We have a connection with a network of loan partners who can provide you with the best refinancing offers in the market! But to qualify for a good deal; you will have to improve your credit score so you can be fit for low-interest rates and low monthly payments.
Refinancing allows you to pay off some of your previous debt. So, you no longer are underwater or upside-down on your auto loan. If you have made a final decision to refinance your auto loan, consider signing up for GAP coverage. Such coverage is life-saving in case of car theft and totaled because it makes up for the difference between what you owe in the loan and the worth of your car.
By refinancing your auto loan and making thoughtful financial judgments, you can get out of your upside-down auto loan within a short period of time. This wise decision will help you grow financially, and eventually, you will thank yourself in the future!