We know that you love your car, but do you love it enough to empty your bank account every month just to pay your Car Loan EMI? No, right? Then, you should consider refinancing your Car Loan, so that you can reduce the burden of the loan. Refinancing your Car Loan can give you several benefits such as reducing your monthly payment amount or better payment options that fit your financial situation.
And if you’re looking to refinance your Car Loan, right now might just be the right time to do it considering that interest rates are falling. Don’t thank us, instead, extend your gratitude to demonetisation. One positive fallout from the whole demonetisation episode, apart from the effort to curb the black money menace, is the banks cutting their lending rates. Now, that’s something positive for the people of the nation, isn’t it?
Additional Reading: It’s All About Car Loans!
Still confused about the whole refinancing thing? In simple terms, refinancing a loan means that you’ll be taking a new loan to pay out your existing one. So, should you consider refinancing your existing Car Loan? Here are a few things to know before you decide on that:
Everything Depends On Your Credit
If you’ve got a good Credit Score and credit history, then you’re in for a treat. Lenders will offer you better interest rates on your loans if you have improved or maintained a good credit score.
Check With A Car Loan Refinance Calculator
You don’t need to approach a bank to get to know how much EMI you’ll be shelling out if you refinance your existing Car Loan. There are plenty of loan refinance calculators available online which you can use to find out how much money you’ll save if you refinance your loan. Use any one of these calculators and estimate how much you’ll save. Depending on this information, you can take a call on whether you want to refinance your existing loan or not.
Don’t Let Transaction Fees Scare You
Worried about paying hefty transaction fees to refinance your Car Loan? Don’t sweat it! Unlike Home Loan refinancing, auto loans don’t demand too much of your savings. Instead, these come with nominal charges which are easily overshadowed by the amount of money you save in the long run. So, if the transaction fee is what’s stopping you from considering Car Loan refinancing, it’s time to think again, buddy!
Additional Reading: Car Loans For Those With An Income Of Rs. 20,000
Co-applicant Applications Are Possible
You can apply for Car Loan refinancing along with someone else, be it your parent or spouse. This is an advantage if you are trying to build your credit or have a low Credit Score. Also, you may get better interest rate offers if you apply with a co-applicant. However, keep in mind that the co-applicant will have partial ownership of your vehicle.
The Application Process Is Fast
You don’t have to wait long for your Car Loan refinance application to get approved and the funds to reach you. Most online applications get processed in about 15 minutes and the funds usually reach you on the same day you apply. So, before you decide to refinance your Car Loan, you should have made up your mind because there is no turning back. Also, keep important documents ready. Usually, lenders will require personal ID proof, employment proof, your vehicle details and details about your existing Car Loan.
Discounts
Quite a few lenders can offer you decent discounts when you refinance your loan, especially if you have a relationship with them. For example, if you opt for to refinance your loan from the bank in which you hold your savings account or Credit Card account, there is a chance that they may offer you a lower interest rate than other lending institutions.
Moreover, you must always compare between different lending institutions and pick the best offer. Actually, this is the universal rule when you are shopping for any financial product. Cool, eh?
Now, let’s discuss a few scenarios where it makes sense for you to opt for Car Loan refinancing.
Falling Interest Rate
You may have taken your existing loan two years ago and today you find that interest rates on loans have dipped. If this is the case, then it makes sense to refinance your existing loan and save money in the long run. If you actually consider the scenario today, especially with the demonetisation wave, lenders are reducing the interest rates on their loans. So, the timing is perfect for those of you looking to refinance your Car Loan.
Personal Money Issues
If you’re facing financial setbacks in your life, you may want to extend the tenure of your loan to reduce the burden of your current monthly EMIs till your finances get better. The additional tenure will give enough leeway to manage the financial crisis at hand.
Shorten The Tenure
You’re in a much better financial situation than you were when you took the loan. Maybe you got a promotion or a better paying job. Anyway, you want to use the extra money to clear off your loan as soon as possible. In such a situation, you can opt for loan refinancing and cut down on the loan tenure. Sounds like a good idea, right?
Now that you are all wised-up about Car Loan refinancing, do you think it’s a good idea to refinance your loan? Share your thoughts in the comments section below, as we learn just as much from you as you do from us!
Bonus Read: When Is Home Loan Refinancing A Good Idea?