“Glorious, stirring sight! The poetry of motion! The real way to travel! The only way to travel”
The words of Kenneth Grahame have perfectly exemplified the beauty of cars. His words symbolize our passion towards it. We absolutely love the beauty on wheels, but are we even comfortable with our car loans?
If you love your car but abhor your car loan, it's time to end this conflicted ambivalent relationship. It's time to refinance your car.
Refinancing your car loan means paying off the current loan with the help of a new loan. The car's title is transferred to the new lender. You will now have to make your monthly payments to him.
Car refinance looks easy, but are you sure about it?
If you are bothered by any of the problems listed below, refinancing is the right option.
WHEN TO REFINANCE YOUR CAR?
1. High Interest Rate / High Monthly Payment
Higher interest rates can be due to several factors like bankruptcy, foreclosure, bad credit report, dealership financing, etc. You can go for refinancing even if there is no substantial improvement in your credit score. A higher monthly payment, inflexible loan terms and conditions can also be a reason for car refinance.
There is no point in stretching a loan that makes you uncomfortable. So, search for lenders and refinance your auto loan.
2. An Upside Down Loan
If you owe more than the car's value, you are having an upside-down loan. This means that even if you sell your car, you will not be able to pay off the loan. You can think of car refinancing to help you. You can get a new loan for lower interest rate or longer term and get out of the mess.
3. Dealer – Financed Car
It must have been pretty convenient to get your car and loan from the same place. But did your dealer give you the best deal? Probably not, Dealers are infamous for charging higher interest rates. Even the Federal Trade Commission is contemplating the same issue. It has noted that the dealer financing can involve operations.
So, if your car is dealer-funded, you should seriously consider refinancing.
4. A Leased Car
If you have a leased car, you will have to make a lump-sum payment at the end of the agreement. Saving such a large amount is very difficult. So, why not refinance your car and spend on regular monthly payments?
5. Improved Financial Condition
Your financial condition has improved substantively from the time you availed the car loan. You may have accepted higher interest rates at that time, but it does not mean you should continue paying the same rate. Refinance your loan to avail better interest rates.
6. Improved Credit Scores
If you have been religiously paying off your monthly payments for the past six months, there are chances of some improvement in your credit score. Check your credit score and if it has improved, refinance your loan.
7. All Time Low Interest Rates – Very Important Factor
The Fed Funds Rate is close to zero (exactly 0.25%). It means there is more liquidity in the economy and consequentially lower interest rates. This is the best time to refinance your car. Take advantage of the situation and get competitive loan rates.
Car refinancing is easy and inexpensive as the refinancing fees are low. The entire process can be accelerated with the help of internet. Go online and search for reliable lenders. Refinance your car and get out of the mess real soon.
Best of luck!