Do you have debt from your car loan hanging over your head? If so, refinancing can be an excellent choice, as it allows you to get a new loan for your existing debt with a lower interest rate.
Many people have car loans with interest rates that are through the roof, having signed up at the dealership without realising that there are much more competitive interest rates out there.
By refinancing, you could potentially save hundreds, if not thousands, of dollars in interest on your car loan.
What is Refinancing?
Let’s start with the basics – refinancing, also affectionately called a ‘refi’ for short, is the process of updating your current credit agreement for a loan. The point of a refi is usually to get a better interest rate on a car loan, personal loan, or any other type of debt.
You may also decide to do this to alter other details of your loan, such as the loan term. If the change is approved, you will be able to get a new contract that overrides your original agreement.
Why You Might Want to Refinance your Car Loan Online
Lower Interest Rates
Borrowers frequently look to refinance when the interest rates go down. Paying off a car can take two years or more, so the average interest rates could change drastically in this time. You only need to look to the recent drops in interest rates for mortgages for an example of this.
Alternatively, sometimes people buy cars without doing a car loan comparison first. They just sign on the dotted line and, unfortunately, begin paying more interest than if they had gone with another vendor.
Refinancing can potentially save you shed loads of money on old debts. Think about it – if your car loan interest rate dropped from 16.5% to 10.9% on a loan with a balance of $12,000, you would save tons.
Say you pay off the loan at a rate of $400 a month – at 16.5% interest, you end up paying $3,579 in interest over the life of the loan. At an interest rate of 10.9%, this drops down to just $2,073. Surely you could use an extra $1506 in your pocket, and all because you chose to get smarter with your money and refinance.
Extend the Timeframe
If you already have a car loan and you’re struggling to pay it off in the timeframe you agreed to, there is a better way. You could always look into refinancing your car loan online to extend the period of the agreement.
For example, if your current car loan is for another year and you’re struggling to make the repayments, you could get a new loan that goes for two years. This will allow you to make lower repayments each week and help you to better juggle your financial commitments.
How Soon Can You Refinance a Car Loan?
You will need to check the terms of your current car loan agreement to find out whether there is a fee for switching over to a new finance provider. Some contracts charge a penalty for prepayment, which is what will happen when you move to a new loan company.
See if there is a date on the contract to state when the penalty no longer applies. Keep in mind that the penalty may be worth it, depending on how much you could save in interest, so do your math rather than letting this deter you.
How Many Times Can You Refinance a Car Loan?
If you have refinanced your car loan previously, you may be concerned that you can’t do it again. However, there is no limit to the number of times you can refinance. There is nothing stopping you from reaching out to another finance company to see if you can get an even better interest rate this time around. Do a car loan comparison to ensure that you are getting the best possible deal.
Should You Refinance Your Car Loan?
There are a few situations in which it might be best to refinance your car loan. Consider the following questions:
Have the Market Interest Rates Changed?
If you’re currently paying too much interest on your car loan and know there are better deals out there, then you should definitely consider a refi. Car loans often take years to pay off, so if interest rates have dropped in the meantime, you could now find a much lower rate.
Has Your Credit Score Improved?
If you have been diligently paying off your loans on time and you think your credit score has improved since you first applied for the loan, you may now be able to get a better rate. It’s worth checking if this is the case.
Has Your Income Increased?
Have you recently taken a higher paying job or moved in and combined finances with your partner?
Either of these could mean that there is more income coming into your household, which is a major factor in the interest rates you are offered. If you have more money now than when you got the loan, you should check if you are eligible for a lower interest rate.
Are You Thinking About Taking Out Another Loan?
One thing to take into account when you think about applying for refinancing is whether you are considering taking out another loan at the moment. If you’re house hunting or contemplating a personal loan, then now is not a great time to refinance your car loan. This could affect your credit score in the short term and potentially increase the interest you pay on any other loan offers you receive.
If you’re not planning on taking out new loans any time soon, then go ahead and refinance. Saving yourself some interest costs will be excellent in the long term, as you can get rid of your debt faster than ever.
How Much Time is Left on Your Loan?
If your loan is almost paid off, it may not be worth refinancing. You will have already paid the brunt of the interest, and if your remaining loan balance is small, the savings will be minimal. In this case, you’re better off sticking with your current loan.
How to Refinance Your Car Loan Online
Refinancing your car loan online with Stadium Finance is as easy as 1, 2, 3. Not only that, but you’ll get a decision on it within hours, not weeks!
Step 1: Apply Online
Hop online and fill out the online application form. It contains just a few questions about your current loan.
Step 2: Response
Now you can sit back and wait until one of our expert team members makes a decision on your refinancing request. If you are approved, you can proceed to step 3.
Step 3: Save $$$
If you get approved for refinancing, you can keep paying off your loan but at a significantly improved interest rate. Lower interest means you can pay your loan off faster than before and kick that debt for good.
Check what your current car loan interest rate is and contact Stadium Finance to find out how much you could potentially save. If you have a large loan, even a slight reduction in the interest rate could save you hundreds or thousands of dollars across the life of your loan, so it’s worth finding out! What would you do with all of that extra money back in your bank account?