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3 Great Reasons to Refinance a Car Loan

3 Great Reasons to Refinance a Car Loan

It's a popular choice to refinance a car loan for lots of reasons. Different people in different situations will find themselves refinancing for a multitude of motives but there are three main ones we see most often.


Our Cayuga car loan team outlines each of the three main reasons to refinance a car loan and how it can benefit you in certain situations.


To lower monthly payments


This is probably the most common reason to refinance a car loan in Cayuga.


Whether you borrow less, take advantage of lower rates, extend the loan term or something else, refinancing to lower the monthly loan payment is probably the #1 reason people refinance.


If you’re in a position to refinance for a lower amount, your payments will reduce accordingly. If interest rates have dropped, you can also make savings.


If you extend the loan term, you will lower your monthly payments but likely increase the overall cost of borrowing. It’s still useful though.


To consolidate other debt


This is another common reason to refinance a car loan. To roll all debts into one loan and a single monthly payment.


For example, say you owed credit cards, a personal loan and perhaps a payday loan as well as your car loan. As long as you had enough equity in your car and sufficient credit score to qualify for the loan, you could pay off all that other expensive debt for a single debt.


This works as long as you can pay everything else off, or the majority of your other debt. While you can make modest savings part paying off other debt, refinancing works best when you can wipe the slate clean.


When your credit score increases


Another common reason to refinance an auto loan is when your credit score increases enough that you’ll get a much better value loan.


For example, you currently have a bad credit auto loan with a competitive but high interest rate. You have improved your credit score over the past year so you’re now in ‘good’ territory and could qualify for a standard car loan at a much lower rate.


In the vast majority of circumstances, this could save you a lot per month and perhaps thousands of dollars in interest over the loan term.


We often recommend this route to clients who come to us for a bad credit car loan, improve their situation and want to access cheaper borrowing.


There are of course, many more reasons for refinancing a car loan and they will all make sense to people in different situations. As long as it makes sense for you and you can afford the changes, refinancing is fast and simple!


Contact Unique Chrysler for help, advice and competitive Cayuga car finance and leasing.


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Categories: Auto Loan

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