Looking for ways to lower your expenses? Now might be the perfect time to consider refinancing your car. That being said, you’ve got to time your move carefully, otherwise, you might not see the savings you’re hoping for. While you can most certainly work with local insurance agents to get better, less-expensive coverage, refinancing the covered vehicle can also do wonders for your financial health.
Your Current Interest Rate Isn’t the Best
When you first financed your car, interest rates might not have been the best, and that’s even if you had good credit when you applied for financing. After all, there’s only so much you can do when it comes to controlling the interest rate you get for your loan. If you’ve kept your eye on the market and have noticed interest rates have fallen since you applied for your car loan, now could be a good time to strike while the interest iron is hot.
You Have a Better Credit Score
If it was your credit score that boosted your interest and you’ve improved that score since financing your vehicle, you’ll most certainly want to consider refinancing your loan. Lenders see you as being less of a risk and more responsible with your credit, which is likely to make them more inclined to lower your interest rate and your monthly car payment.
You Have Financial Setbacks to Overcome
Life may have thrown you a few financial curveballs. If it has, refinancing could be a way to lower your car payment so you have money left over every month to devote to whatever financial woes are plaguing you. Know that you might have to extend the overall life of your loan to net that lower monthly payment, so be sure you keep that in mind before sitting down with a lender.
You Didn’t Get the Best Rate When You First Applied for Financing
Even if interest rates were low and you had good credit when you first signed up for financing, that still doesn’t mean you got the absolute best rate. The fact might be that the dealer or lender simply didn’t give you the best rate possible. You also have to bear in mind that dealerships look for ways to make an extra profit off customers, and you may have been taken advantage of. In any case, refinancing could be an ideal way to recoup your losses without feeling completely cheated.
Your Income Has Changed for the Better
If you’ve recently received a raise, have come into another source of income or have simply lowered your monthly expenses, why not put that extra money to good use and refinance your car loan? Should you receive a lower monthly payment after refinancing, you can pretend as if that payment hasn’t changed and use anything leftover towards the principal to reduce the amount of interest you have to pay over the life of your loan.
Your Car Lease Is Nearing Its Expiration
Did you lease your car instead of buying it outright? If you’re close to fulfilling the terms of the lease and would like to buy the car, think about refinancing your loan to make the transition easier on your wallet.
You Want to Pay Off Your Loan Faster
Your financial situation might not have been the absolute best when you first financed your vehicle, which might have resulted in you agreeing to a longer loan term. Maybe things have changed for the better since then and you want to reduce the life of your loan. While this might result in higher monthly payments, it could result in savings over the long term.
Take a look at your current and future finances when deciding whether it’s time to return to the bargaining table for your auto loan. Refinancing can hurt you just as much as it can help if you don’t have a full understanding of what you’re getting into.