A human needs money continuously. Food expenses, gas for cars, electricity bills, academic fees, basic hygiene needs, etc., always require a good sum of money. So when it’s not worth saving up? Refinancing a car has one sole motive. It is to lower your monthly car payments as much as possible. The bonus point of refinancing is that it doesn’t only help you save cash every month, but it also allows you to save cash for a continuous period. Wondering if refinancing your car is worth it? This blog will help you find the right answer to your question.
How to Get My Car Refinanced?
Refinancing means replacing your original auto loan with a new loan while keeping the previous vehicle. The refinanced loan is likely to have a lowered interest rate, which helps you save a hefty sum of cash. For this purpose, you can either talk to your current lender or find a new lender.
Your new lender will pay off your previous auto loan on your behalf and start a new loan while replacing it. It will prove to be favorable in your regards.
There are three possible ways for refinancing a car loan:
- Extending the loan to a longer-term.
- Reducing the interest rate.
Lowering the interest rate has proved to be the most profitable option where you can save a lot. On the other hand, if you try to extend your loan while keeping the same interest rate, you will have to pay interest charges for a lengthy period. It results in you expending more than the usual amount of money.
However, if you manage to lower your interest rate and extend your loan, then you will have to pre-calculate whether it will be beneficial for you or not. If you are only opting for refinancing because you want to lower your monthly payments, then extending the loan will work well. Be aware of the extra interest costs that you will have to pay throughout the added months. It may not be “worth it” when choosing this option of refinancing.
What Are the Requirements for Refinancing?
Refinancing requires you to do a lot of work. Firstly, you will have to search for a lender who is willing to cooperate with you. If you took out the original auto loan with a bad credit score, then be patient. Take your time to find a lender who can lower the interest rate for you so that you can save a good amount of money. Interest charges keep on piling over time when you are only capable enough for a two-digit interest rate.
Even if your credit score is struggling at the moment, you must look for a refinancing loan that offers a lower interest rate than the original auto loan. Lenders have set criteria for eligibility for refinancing. To get your car loan refinanced, you and your vehicle must qualify for some specific requirements.
Always remember, every lender has set varying criteria for eligibility. However, we have stated the basic stipulations that are a must:
- Your vehicle is no older than 10 years old.
- You have been paying your car loan for at least one year.
- Your credit score is good, and it has been progressing day by day.
- Your vehicle has a mileage of fewer than 100 000 miles.
- You have a good loan payment history.
- You have equity for your car.
If the answer to these requirements is a yes, go ahead with the refinancing process and start looking for a lender. Since every lender has a different collection of requirements, take your time to find the one that offers you the best and suitable deal.
If you are hesitating on how to start lender hunting, consider filling our free refinancing request form. We help you partner up with a reliable and well-informed agent.
What If I Don’t Meet the Requirements?
If you don’t fit in the requirements set for refinancing, switch to a cheaper vehicle. People aim for refinancing to lower monthly payments, but it comes with great stress. If you prefer keeping things simple and calm, try trading in your car for something else. It will be your best move ever.
Taking out an auto loan without a perfect score is quite impossible. But no worries! We at CarLoanRefinancing are here to sort out everything. We will help connect you with skilled dealerships throughout the nation.