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Car Loan Refinancing In Milton - The Pros And Cons

Car Loan Refinancing In Milton - The Pros And Cons

If you have had your car loan for a while in Milton and are thinking of refinancing, you’re not alone. It’s a common thought among many who are a year or two into their loan and are looking for a change in payment.


Car loan refinancing isn’t always a good idea but can work in your favour in the right circumstances. Before you commit to refinancing, you should know the pros and cons of it first.


Cart Loan Refinancing Pros And Cons


Pro – Get a better interest rate


Depending on when you got your car loan or what your credit score was at the time, now might be ideal for getting a better rate.


If you have improved your credit score and have a year or more of on-time payments, you should find cheaper car loans and a wider pool of potential lenders willing to work with you.


Pro – Lower your monthly payment


Refinancing your car loan and keeping your current car means you can lower the amount of the loan, which will in turn lower your monthly payments. This can help for growing families, a change in career or just to save a little money each month.


If you have had your loan a while, you will have paid a significant portion of it off. If you’re far enough in, that could make a real difference to those monthly payments.


You could also extend the term of your car loan. If you’re halfway through a 48 month loan, you could refinance the balance over a further 48 months to lower your monthly payments.


Pro – Free up some cash


You could also go the other way and borrow a little more for other things. If you have paid off a chunk of your loan, you could always reborrow to upgrade your home, make any repairs, or for something else completely.


Much will depend on your car, the type of loan and your current circumstances but it is possible to borrow more if you need the cash.


Con – Potentially more expensive in the long term


Car loan refinancing is not all good news though. It could make the overall cost of the loan more expensive. If you extended your loan to lower the monthly payments as outlined above, the monthly cost may reduce but the overall cost may become more expensive.


Interest is calculated over the term so if you extend the term, the overall amount of interest you pay will increase.


Con – Older cars attract higher rates


While you may have a great credit score and can easily afford the loan, if your car is getting on a bit, you may not see the lower interest rates you expect. Many lenders will charge a higher interest rate for older cars.


If you bought a used car with your loan, you may find the new interest rate could be the same or even slightly higher on any new car loan proposal. That seems counterintuitive but could be down to the age of the car.


Con – A new car loan may be cheaper


Refinancing is definitely a viable way to raise or save money but it isn’t the only way. It may be better to settle your current car loan with a new loan altogether.


Your new loan could have a lower rate, a shorter term or offer other incentives. Either way, it could be cheaper to service than your current loan and should definitely be taken into account before you commit.


Whatever you decide to do, car loan refinancing is definitely an option if you need to change things up. It isn’t your only option though so make sure you check everything that’s available before your commit!


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


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Categories: Auto Loan

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