Refinance Car Loan: When Does it Make Sense to Do This?
The financing for a vehicle purchase averages a payoff period of three to five years. Since it is a short period compared to the length of a mortgage, people pay it off as is. There are times when it makes sense to refinance a car loan even though the length of time is relatively short. The following are some reasons to consider.
Drastic Rate Drop
Drastic drops in interest rates occur suddenly. Government policy impacts them, so does the banking industry. A drastic drop greatly impacts your loan, too. A drop from 5% to 3%, for example, leads to hundreds in savings. You can apply the savings back to the loan and pay it off even faster. Others may need to extra funds for something pending such as Medicare expenses, children’s education or a business endeavour. Simply put, some opportunities should not be missed.
Improved Financial Situation
Car dealerships are in the business of selling cars, new and used. They sell to well-qualified applicants, but they also sell to those with spotty payment histories. If you bought a car with a spotty credit history and it improves, you can take that to the lender. Car owners who prove their financial situation improved, have the ability to refinance their vehicle loan. Since you are less financially risky, it does not hurt to inquire.
Better Deal is Available
It is rarely pleasant to find out that a better deal became available after a purchase. In some cases, you qualify for the better deal, too. The scenario may involve extra paperwork and swapping cars, but you drive away with a better deal and vehicle.
Refinance Car Loan Conclusion
A car is necessary for some and a convenience for others. Car owners interested in seeking information to refinance car loans, contact our Mortgage House team. A member is ready to review your current loan and financial situation. Plus, you can use our car loan repayment calculator with no strings attached.