Refinancing your car loan means replacing your current auto loan with a new one from a different lender, with new terms. Car loan refinancing helps you pay your current auto loan with a new one and this can have different outcomes particularly for car owners. Therefore, it’s essential to consider your motivations for car loan refinancing and the results you want.
Although most people refinance to save money, this goal can take various forms. Some car owners want to reduce their interest rates. Others wish to adjust their car loan term lengths or lower their monthly payments. However, some may have personal reasons such as removing or adding co-signers to their car loans. No matter your reason to refinance, it’s particularly important to understand the results you’re seeking.
What are the possible outcomes of car loan refinancing?
All auto refinance deals are not the same. However, people who want to refinance usually seek one of the following results:
Lower monthly payments
Most people who seek car loan refinancing want to lower their monthly payments which can have a significant impact on monthly finances for many households. However, this shouldn’t be your only consideration when you want to refinance your car.
There are two main ways of lowering your monthly auto loan repayments. You can extend your car loan term, get a lower interest rate, or do both. One of the best ways to reduce your car loan repayments is by extending the period over which you intend to repay your loan.
But, it’s essential to understand that extending your car loan repayment period can increase the total amount you’ll end up paying for your car. However, if your lender gives you a significantly lower interest rate and allows you to extend your car loan term, you may both reduce your monthly payments and end up paying less in total.
Lower your interest charges/reduce your interest rate
Although this goal is interrelated with reducing your monthly payments, some customers prioritize reducing the interest rates on their car loans. If you improve your creditworthiness during the course of your loan, you may wish to meet an appointment with a financial representative from Approval Capital to evaluate your borrowing risk capacity according to the 4 C’s of credit (Credit Score, Capacity, Collateral, and Character). If your creditworthiness has improved since you initially obtained your high interest rate credit rebuilding loan, you may get a lower interest on your next car loan. Therefore, you may end up reducing the total amount in interest charges you’ll end up paying on your loan.
Change your car loan repayment period
Some people refinance their car loans in a bid to adjust their car loan term lengths. However, in most cases this is interrelated with reducing monthly repayments rather than simply changing the number of months over which customers pay for their cars.
Add or remove someone as a cosigner to your car loan
Sometimes customers may want to seek car loan refinancing for other personal reasons such as adding or removing someone as a co-signer to their loans. Refinancing your car loan is an easy way to add or take someone off your loan because Approval Capital gives you a new car loan with an entirely new contract.
It’s particularly important to keep in mind that refinancing your car loan can have various different impacts on your finances. Every auto loan refinancing contract is different and different customers have different reasons for refinancing their car loans. Approval Capital takes the time to learn and understand your needs in order to match you with an auto loan that meets your specific needs.