How to Lower Your Car Loan Interest Rate
Our cars are part of the family – we understand that. Whether you use yours every day for the school run or getting to work, or just at weekends for a day out somewhere, cars are important and we need them.
However, cars are also expensive and very few people buy their car outright. As a result, car loans are extremely common in Australia, with millions of drivers benefiting from them every day.
Car loan refinancing is something that could genuinely make a difference to your cash flow each month.
So don’t settle for an interest rate if it’s not working for you. There may be many options available to you in terms of refinancing your car loan – helping to lower your payments and save you money.
What is car loan refinancing?
Car loan refinancing means replacing your current car loan with a new one, with different terms. It sounds simple, but it’s best to cover the basics first.
Benefits of car loan refinancing
Refinancing a car loan can have several benefits including:
- Lower your car loan interest rate
- Extend your loan, lower your payments
This is the most common reason for car loan refinancing. If you had a bad credit history or a poor credit score at the time of purchasing your car, it may be worth refinancing your car after a couple of years. In this time, your credit score could have improved or you may have built up a history with your lender. If you are happy with your current lender, it’s always worth trying to refinance with them. However, you may need to switch lenders to achieve the lowest car loan interest rate available to you.
Life circumstances change all the time. You may find yourself expecting a child or having undergone an unexpected medical situation. Whatever happens, you may be unable to meet your current payments and need them to be lowered.
Refinancing your car loan can help to extend your loan meaning that lower payments are made over a longer period of time. This could be vital if you need to free up cash flow in the short term.
So, have a think. Ask yourself whether your credit rating has improved since you first got your car loan? Or whether you’re unexpectedly in a position where you need extra cash available to you.
If so, you may want to consider refinancing your car loan. To get the best loan for your needs, make sure you provide the most accurate information you can.
Take some time to work out your budget and figure out exactly how much you can spend on your car loan at present. Never try to push yourself beyond what you’re capable of paying as you may end up with expensive fees from missed repayments.
Disadvantages of car loan refinancing
It’s really important to be aware of the full story when you set about refinancing your car loan. It’s easy to get carried away thinking about saving money or suddenly freeing up cash.
Unfortunately, there can be drawbacks to car loan refinancing so always seek expert advice and consider the following disadvantages:
- Pay more interest long-term
- Beware of higher interest rates
It’s true that you can often refinance your car loan with a lower interest rate. However, this generally means that the loan is extended – therefore you will end up paying more over the length of the loan. It’s important to only extend your loan if absolutely necessary.
A useful way of finding out whether it’s worth extending your loan is to use a Loan Calculator which will help you weigh up the right option for you.
Often needing cash as quickly as possible is the reason for refinancing a car loan. Although it is often unavoidable, you are likely to pay for the extension of the loan with a higher interest rate. If you can avoid extending your loan you are likely to benefit from lower car loan interest rates.
Whatever your circumstances, make sure you call Positive Lending Solutions today on [phone] to discuss the best options for you. We have decades of experience in car loan refinancing and can help you find the best solution for you.