Car Loan Refinancing- refers to replacing your existing auto loan with a new auto loan from a different lender.Car loan refinancing can help you get access to favourable repayment terms even when a loan is already in progress. When you choose to go for refinancing, you will get a loan with new features, benefits, and terms.
Car loan refinancing can be very beneficial to a borrower in the following instances:
You can also consider refinancing your car loan if your credit score has improved over your loan tenure. When this happens, you may be eligible for a finer loan deal at a lower interest rate with better terms.
On the other hand, if you refinance your loan to reduce the loan term, you will be able to clear off your loan quickly and decrease the interest amount that you pay for your loan. In this case, your EMIs may increase.
Before you decide to go ahead with refinancing your present auto loan, you can check the following factors associated with car refinancing:
It is a good idea to avoid car loan refinancing in the following circumstances:
Car loan refinancing is a good idea if you get a better interest rate or if you get better loan terms due to an improvement in your credit score/financial condition during your current loan tenure.
Do keep in mind that you will not be able to refinance your existing loan within the same bank. Refinancing is typically done by applying for a new loan from a new lender. In case you do want to stick to your old lender, you will have to go for a top-up loan or pre-close your existing loan and apply for a different loan from the same bank.
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