- Interest Rates Be Dropping
Automotive loans follow the same rules and laws of any consumer loans: they go up, they go down, and the smart consumer can gauge where they stand before moving forward with any financial decisions. Refinancing a vehicle should be done when rates go lower, but don’t wait too long to act; like an ocean tide, the rates will go high again. Make use of an online vehicle finance calculator and plan accordingly.
- Reconsider the Dealer Loan
One of the great principles of auto refinancing can be seen with the ability to shop around for a better deal. If you’ve made use of a car loan calculator and you’re considering any kind of auto refinancing, you’re probably doing so to get a better deal than what you’ve currently got. This can be especially true if you financed the vehicle through the dealership rather than approach a bank. As an alternative, look at the current loan and start comparing the details with those offered with other banks and lenders. Who knows? You may find a better interest rate with another lender.
- Level (Your Credit) Up
Anyone dealing with a high interest loan has been in this situation: bad credit dragging down your options. While it’s no secret that lenders look at a bad credit score as a detriment to giving out loans, that doesn’t mean other lenders won’t ignore your efforts to improve your credit standing. If a borrower’s credit score has shown improvement since the initial car loan was granted, the borrower might be able to leverage that score to refinance the vehicle.
- Nice Car. I Think I’ll Buy It
Option to buy. Three little words that can make a big difference in how you obtain a vehicle. Auto leases can include an option to purchase the vehicle when the lease comes to an end. Think of it like renting a condo for a one-year lease and then deciding to buy it when the year ends. When the lease on the vehicle runs out, the buyer can consider obtaining a refinance loan and just buying the car.
It should be noted here that option to buy might not be the best financial decision. The buyer should consider several factors, such as the overall cost of the vehicle, the advantages of switching from lease to purchase, and the potential amount of interest a refinance loan. As with most economic decisions, a variety of options exist for the buyer who takes the time to research them. Break out that new car loan calculator when considering this option.
- Lower That Monthly Bar
Depending on a borrower’s current financial situation, refinancing a vehicle can be a big step in getting themselves back on track. Refinancing doesn’t just work when a borrower wants a better deal; sometimes it’s the helpful tool to ensure you can get a better deal down the road. When dealing with personal finance, it’s important to remember that all difficult financial situations do not have to be solved before the end of the week; sometimes refinancing today can lead to a more stable financial future. By extending the life of the loan, the monthly payments can drop to a more manageable number. That may mean you end up paying more for the vehicle, but it can also mean the next loan you will start with a better interest rate.
Best Times to NOT Refinance
- The Loan Be Almost Done
Refinancing works best at the beginning of a loan. If the loan has almost been completed, it won’t do the borrower much good.
- High Mileage Buster
Another reason refinancing works best at the front of the loan? Lenders tend to shy away from refinancing loans on vehicles with high mileage or have been in heavy use.