As consumers we often shop around for insurance and spend hours on Autotrader looking for the right vehicle. So why don’t we do the same for finance?

 

How much time are you putting into finding the best finance option? Many of us turn to dealerships when it comes to finance but with limited product choices you may not end up with an agreement that’s right for you.

 

If you borrowed to buy a car, you’re not stuck with your original loan. You might be able to save money with a better loan, that we can easily organise for you.

When can you refinance your vehicle and how does the process work?
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You do not need to wait for a minimum time before refinancing your car loan. In fact, you can refinance immediately after buying – even before you make your first monthly payment, or at any stage during your agreement.

To refinance, you’ll need:
Information about your existing loan, current lender and loan balance.
Information about your vehicle.

When is refinancing a good idea?

If you can borrow at a lower interest rate, it might make sense to refinance. That lower rate (assuming all other things are equal) means you’ll pay less for your car after you take interest costs into account. Because the interest rate is also part of your monthly payment calculation, your required payment should decrease. As a result, you’ll have slightly better cash flow each month.

If you can replace your existing loan with the same loan at a lower rate, it’s best to refinance as soon as possible. Most auto loans are amortizing loans, which means you pay a fixed monthly payment with interest costs built into the payment.

You’ll pay down your debt over time, but most of your interest cost is paid at the beginning of the loan – so get that rate down sooner than later to start cutting costs.

Refinancing can result in lower monthly payments, but that’s not always a good thing. If you get lower payments as a result of a lower interest rate, you may end up saving money (as long as you refinance at the beginning of your loan period). If you just add years to your loan, you’ll pay more.

If your credit has improved since you got your existing loan, you have the opportunity to get a better loan. You might qualify for a lower rate, lock in a low fixed rate, or be able to get a cosigner removed from the loan.

When you make payments on time (or negative items fall off your credit reports after seven years or more), your credit improves. Those successful payments can raise your credit scores to the point where you have more options. Even a year or so is enough time to see improvement – so it’s worth finding out if your scores have improved enough to qualify you for a better loan.

There may be a better finance product for you. Learn more about the options available here.

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