Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .


Refinancing a car loan

Refinancing a car loan

If you have taken a loan to buy your car and are having problems repaying the loan, you can take yet another loan to help you pay off the original loan. This is known as refinancing. It helps you to reduce your financial burden. There is another reason why you may want to refinance a car loan, which is you may be able to get the loan at a lower interest. This can lead to a lesser monthly payment, thus helping you save on money.

Why refinance?

There are many reasons why you may want to refinance a car loan. Let us take a look at the reasons.

  • Reduced interest rate: When you bought your car some time back, you may have taken a loan at an interest rate of 10%. Now you may find a lender who is offering a loan at 9%. This represents a saving of 1%, which can be substantial savings for you. However, you must remember that when you refinance a loan and pay back the original lender, you are prepaying the loan. Lenders generally levy a fee or penalty for prepayment. You need to work out the cost of prepayment. If it works out to be more than the savings from the reduced interest rate, then it does not make sense.
  • Modifying terms: When a loan is taken, there would be various terms and conditions associated with the loan, including the tenure or duration, charges, insurance, and hypothecation. If you get a loan, which gives you better terms and conditions, then it naturally makes sense to go for the new loan.
  • Monthly savings: With a lower interest rate, you get to save money every month. Even a 1% reduction in interest rate will lead to some money being reduced from your monthly payouts. This represents savings, money that you can use for something else.
  • Changing a co-signer: If you want to add a co-signer to guarantee your loan or remove an existing co-signer who for some reasons does not want his name to remain, you can then go for refinancing. When you sign a new agreement for the refinanced loan, you can include a new co-signer to relieve the previous co-signer of his obligations.
  • Changing lender: You can opt for refinancing if you want to change the lender. For any reason, if you are not happy with the old lender or just want to sign up with a new lender with whom you are now doing business; refinancing helps you to do it. Refinancing by default implies a change in the lender.

Things to keep in mind

When you decide to go for refinancing, there are certain cons or negatives related to this. Your loan term or duration may increase. With a lower interest rate, you have to pay for a longer period, which in the long run means you will be spending more money. Your monthly payout will come down, but the overall amount will definitely increase.

How to do it

Apply to a new lender who gives you a good deal. Make sure you have all the documents of your present loan ready. Also, make sure you have a good credit score, if you have defaulted, then you are unlikely to get refinancing. Evaluate the terms of the refinancing and make sure you read the fine print. Check the prepayment penalty and once you are convinced you will get some benefit, go ahead and complete the formalities.

Refinancing a car loan has many advantages, you need to evaluate the new terms before you sign up, so you can reap its benefits.

Global Banking & Finance Review


Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post