Refinancing your car loan could put the brakes on your costs and save you money.
If you do your research and compare your options, refinancing your car loan could save you thousands over the life of the loan and potentially give you extra flexibility and features.
Here are some of the benefits of refinancing your car loan.
Reduce your interest rate
One of the best reasons to refinance your car loan is to get a better interest rate, which could save you thousands over the life of your loan. If you are currently on a fixed rate, you may have to pay break costs to refinance. Of course, if you refinance to a variable rate there’s always the chance that rates could move up or down, which would change your monthly repayment amount.
If you’re refinancing to get a better rate, keep the original loan term rather than refinancing to a longer loan term. If you refinance to a longer loan term, your monthly repayments may seem smaller but you’ll actually end up paying more in interest over the life of the loan, so you won’t really be saving money. Whereas if you stick with your original loan term, you can wipe off a chunk of that debt quicker.
Lower your monthly repayment
If you need to free up your cash flow, refinancing to a longer loan term could make your monthly repayments smaller but don’t forget that this also means you’ll end up paying more in interest over the life of the loan.
If you keep your monthly repayments the same by sticking with the original loan term, your cash flow won’t change in the short term but you could potentially pay off the loan faster, so you’ll save money in the long run.
Get a loan with better features
You could potentially find a car loan that comes with extra features, such as the option to make extra or more frequent repayments to help you get on top of your debt quicker.
So when is the best time to refinance a car loan? At loans.com.au we can provide car loans for vehicles that are under seven years old. Our personal car loans have a competitive 4.67% interest rate (5.22% comparison rate) with no monthly or ongoing fees, the option to make weekly, fortnightly or monthly repayments, and optional balloon payments.
If you’d rather sell and buy a brand new car, why not make it an eco-friendly car? We offer discounted interest rates of 3.97% (4.51% comparison rate) for eligible green cars.
To find out if you qualify for a car loan with us, chat with one of our lending specialists today.