Refinancing is a cost-effective way of saving yourself some money. In car refinance, you will be able to shift your current loan to a new lender. The process involves having the borrower’s payments, dues and all, paid by the new lender to the one prior. This is usually considered when you find a loan with a better rate of interest then the one you currently hold. Furthermore, if you have a bad credit score, this scheme can benefit you. You can repay the dues while saving money.
Although the car acts as a collateral, lenders will still have to be approved of the loan amount. Furthermore, car refinance may not be for everyone, but don’t be disheartened. It can be a convenient way to save you money on your car. You may wonder if refinancing a car can hurt your credit score. It actually doesn’t; it may even do the opposite. So, how can you refinance a car the easy way? Well you have to consider a few things.
Do I have bad credit?
If you don’t, then you don’t have any problems. However, in case you do have bad credit, don’t be intimidated. Refinancing a car on a bad credit score may actually help you improve your credit in the long run, if you get a better deal. By replacing your original (money-sucking) car loan, your credit score can improve over the period you pay the new loan.
Can I refinance with the same lender?
Probably yes, but usually car refinance means settling and terminating the original contract. This usually entails a new lender. However, checking with your original lender may lead you to a better interest rate than what you originally got.
How can I refinance my car?
Before you apply for a car refinance, you have to figure out what’s right for you. Consult with your current car loan and ask about the amount of debt you owe. You can do this by calling the bank, the dealer or whoever hold your loan. Ask what the payoff amount is as this is the information you will be giving to the new lender, once you find one.
Maximizing your options by giving the payoff amount to multiple lenders and see what refinance package they can offer you. Afterwards, finding out your credit score can help you get a better feel of what interest rate you may receive. Once that is all set, calculate whether or not the packages you are being offered are lower than what you currently have. If they are, then you should refinance your car loan.
Besides to not having much of a downside in refinancing your car loan, you will save money.