There are many reasons why you might want to refinance your car loan, and there are a few things to take into consideration before you decide to do so. Your biggest win when it comes to refinancing is likely to be your paying less money over the life of the loan. Read on to find out if refinancing is right for you.
Why consider refinancing?
Reasons for refinancing your car loan can include:
- Getting a better interest rate
- Reducing your repayments
- Changing the length of the loan
If your credit rating has improved because you’ve paid down some debts, you may be eligible for a lower interest rate on your car loan—or you might want to refinance simply because you’re not happy with the service you’re getting from your current lender. Whatever your reasons, refinancing could save you money in the long-term and give you more flexibility with repayments.
Compare your options
Be aware that advertised rates can be misleading, so always use a comparison rate because it includes all fees and charges. This gives you a better idea of the loan’s total cost. Look for a website or a broker who can help you do this.
All personal loans have eligibility criteria to meet, and fees and charges can mean that a lower interest rate may not add up to a better deal over the life of the loan. Your existing loan could also have an exit fee for paying it out early. Take some time to research the finer details to make sure you find the best possible deal.
What you will need
Whether you’re applying online or in person, you will need to gather all the relevant documentation. Lenders will require personal information such as a list of your assets, evidence of your income and current loan statements. You will probably have to list your current expenditure as well, so create a budget for that. All lenders will need identification documents, and they will check your credit rating and credit history.
You will also need to provide details about your car and its current value. To find out how much your car is worth, get an instant valuation on Gumtree Cars. Please note that we’ve provided this free valuation tool to help our customers get the best price when selling a car. It is a guide only and the price estimate is based on your vehicle being in guide condition with average mileage.
Make it happen
If you decide to go ahead and refinance your car loan, you will need to complete all the application requirements and then wait for approval. Once approved, you will then sign the loan agreement. If it is a secured loan, your new lender will pay off and close your current loan. For an unsecured loan, you will receive the funds directly and be responsible for paying off and closing your existing loan.
There are lots of things to consider when refinancing a car loan, so take the time to do your research. For more information about car loan refinancing, read more tips from Gumtree on how to make sure you aren’t paying too much for your car.