Should You Refinance Your Vehicle?
Loan refinancing means that you replace your current loan with a new one, maybe with the same lender or a new one. You use the money from the new loan to repay the new loan. The next step is to start paying installments on the new loan. Some reasons why people choose to refinance their vehicle loans are low-interest rates and an improved credit score. Vehicle refinancing with any West Freehold or Lakewood bank can also help you to pay less and reduce the tenure of the loan. Keep these things in mind when you refinance:
1. Your credit score can dip slightly because of the new loan application.
2. Most vehicle loans don’t penalize borrowers for paying off a loan early.
3. Refinancing is easy – no application fees and the money is in your account soon after submitting a new loan application.
Why refinancing is a good idea
The idea of paying less interest on a loan and having lower monthly payments is appealing to every borrower. If you are currently paying 9% or more to a NJ finance institution, lower interest rates are a good motivation to refinance. When interest rates dip, doing some research online will give you an idea of how much you can save. If you want to get a loan from Sansone Jr.’s NJ Auto lending, check their refinancing options as well. Refinancing will help you build up your savings.
If you have a loan from a dealership, it is likely that you are paying a higher interest rate. Vehicle refinancing in this case is a good idea because you pay less and pay your loan off faster. Always keep track of your credit score because this influences your ability to get an affordable loan.
If you bought a car that you always wanted and it was beyond your budget, vehicle refinancing can help you keep up with payments. This option should be exercised if you face financial difficulties and need a vehicle for daily tasks.
Vehicle Refinancing FAQs
How does vehicle refinancing work?
Loan refinancing means getting a new loan at lower interest and monthly payments. The old loan is paid with money from refinancing. The new loan starts with a new tenure and interest rates.
Will my monthly payments be lower?
Yes. You can get a new loan with lower monthly payments if you agree to a longer term. Keep in mind that you will pay more than the car’s value over the long run.
What credit score will get me a better interest rate?
Good credit scores and other factors like a steady employment history and debt-to-income numbers influence your ability to get good interest rates. A credit score of 700+ is considered good to qualify for a loan whether you live in Freehold or Neptune NJ.
Can I get a co-signer's name taken off with vehicle refinancing?
Co-signers are needed for people with bad credit scores. A co-signer takes legal responsibility to pay off your loan if you are not able to. If your credit scores have improved, you can get their name off the new loan. The new lender pays off the original loan and releases them from their obligation.
When is vehicle refinancing not recommended?
There are several reasons why you should not refinance your auto loan.
1. Prepayment penalties may be part of the original loan. Check your paperwork carefully or you could end up paying a lot of money.
2. Upside down on your loan: This is a situation when the amount you own on the vehicle is more than it is worth.
3. Low credit scores: It could happen that your scores dipped because of unforeseen circumstances. Not only will you not get a good rate, but you also may not qualify for a loan because of poor credit scores.
How soon can I refinance my current loan?
You can do this any time. It is a good idea to wait and improve your credit scores. Do your research and crunch numbers before refinancing any loan.
Any other questions? Feel free to reach out to us at Sansone Jr's NJ Auto Lending.