Many people get forward to avail a loan to buy their dream car despite a higher percentage of interest to be paid. But thorough market research could have saved a lot of your hard-earned money. But it is better late than never. So you can search for cheaper interest rates also so that you can take another loan to close the previous loan with a higher rate of interest. This is called refinance car loan which can bring a cold breeze to your worries about the loans. The refinance loan is taken from a new lender where you can get more favorable facilities on the loan.
What is the Right Time to Refinance Car Loan?
There is no particular time to refinance car loanwhich can be termed as the best time. If you are eligible to avail of a new loan then only you will get the loan on some better terms and conditions. If you are eligible, then you can always go for a refinance after the completion of the minimum term criteria which is usually one month. Mostly people opt for a refinance to manage the tenure of the loans. Usually, they go for it to increase the terms and tenure of the loan, but some people also go for minimizing the tenure.
Does the Same Bank Allow Refinance?
Usually, the same bank doesn’t allow you a refinance loan against your previous loan. But if you are having a very good credit score and pay your installments on time, then you may get allowed for a refinance loan from the same bank. In the current market to increase profitability, most of the banks allow third-party lenders to buy auto loans from their end and they earn a certain percentage on it which they wouldn’t have earned if they provide loans directly. Another way to get some more amounts from the banks is the top-up loan which the banks offer to people with better commercial health. The typical refinance schemes are to transfer the auto loans to other lending bodies and the switchover is done by the lender who is offering a lower rate of interest to the customer.
Benefits You can Obtain by Refinancing
If you opt for a refinance scheme, ten you will do it for some better offers and benefits. You have to consider each and every factor regarding the loan and then only you will go for a refinance scheme on your car loan. You should look for the underwritten benefits while thinking of refinancing.
- Lower Interest Rate
Generally when people opt for a refinance scheme, they go for a lower interest rate so that the amount to be paid as the interest gets lower. Since the tenure of the loan remains the same, a lower interest rate may help you by decreasing the significant amount on the interest.
- Improved Credit Score
As you have maintained a timely payment of installments of your existing loan so your credit score might have improved to get another loan for the time being even if you are continuing with an existing loan.
- Dynamic Tenure
Sometimes people want to increase the tenure of the loan. Mostly they opt for lengthening the tenure, but there are very few people who want to decrease the tenure. Changing the tenure and keeping the interest rate unchanged may bring some relief to your monthly installments.
Refinancing a loan may not be so easy, but in the current market scenario, it is not impossible too. There are several organizations if you search for them online who help you refinance the loans with lower interest rates.