After you’ve had your car loan for a while, you may get advertisements for refinancing that loan. While you may ignore them, to begin with, you really should take refinancing into consideration. In fact, refinancing your car loan can lead to four awesome benefits.
Get a Lower Interest Rate
Do you know refinancing a car loan can be a great way to take advantage of a lower interest rate? The lower you can get your interest rate, the less money you’ll be paying the lender in interest fees to have the loan over its entire term. There are online resources, such as Lantern by SoFi, that allow you to compare multiple vendors in a single application.
There may be multiple reasons that can allow you to get a lower interest rate. First, you may have skipped over comparing interest rates when you got your initial car loan and ended up with a high one. Second, you may have improved your credit score and have become eligible for lower interest rate loans. Third, a particular lender may have a special interest rate promotion going on that you want to take advantage of.
Lower Your Monthly Payment
At the time that you got your vehicle loan, your payment may not have been overly high. However, financial changes may have changed your perspective on the amount that your monthly payment is. For example, you may have a lower income now, or you may have bought a house and have more monthly payments than you used to.
Either way, you can opt for refinancing your auto loan to receive a lower monthly payment. In almost all cases, you’ll need to extend the term length of your loan in order for the monthly payment to drop. So, instead of having your auto loan financed for two more years, you may need to increase that to three or even four years to achieve a monthly payment that is manageable.
Get Cash Out
If your current car loan payoff amount is much less than the actual value of your vehicle, you may want to utilize that to your advantage. Instead of taking out a personal loan or putting an expense on a credit card, you can simply refinance your existing auto loan.
The loan will be refinanced for a higher amount that is owed on your initial loan. This will likely increase the term length of your loan and can drive up your monthly payment amount. However, it’s a great way to get access to cash quickly when you need it most.
To Remove a Cosigner on the Loan
Another reason to refinance your existing auto loan is so you can remove a cosigner, but you can’t or don’t want to do so via a standard release. When you first bought your vehicle, you may have needed a cosigner due to your lack of credit history or your low income. Either way, if you’re able to get an auto loan on your own, you can pay off the existing loan and remove the co-signer from it.
Refinancing your car loan can be a great way to save yourself money, get access to funds when you need it, and remove a co-signer from your existing auto loan.