Refinancing my car loan: All you need to know
Taking out finance to fund the purchase of your car or van, then you may have seen refinancing as an option should your financial situation have changed since you originally purchased the vehicle. However, refinancing can be a bit confusing, which is why we have created this quick guide to further enhance your understanding. Here's all you need to know about refinancing your car.
What exactly is car refinancing?
In simple terms, car refinancing is when you take out another loan or finance package to pay any outstanding balance on an existing car finance agreement. So if you've taken out a hire purchase or a PCP package, you can start what is in effect a new deal to finance and pay the outstanding balance of your vehicle.
Why would I refinance my car loan?
Refinancing your vehicle is an excellent method of reducing the amount of money you are paying on your monthly repayments. However you will most likely need to extent the length of your agreement - however, refinancing allows you to make the finances work for you.
For example, if you had £2,000 left to pay with 12 months left on your agreement, you could refinance your car to a new deal over 3 years (36 months), reducing your monthly payments to £55 per month - down from £166. This doesn't factor in additional fees and interest charges but should offer an insight into potential savings that can be made with more favourable terms, such as lower interest rates.
When should I refinance my car?
You can look to refinance your car at any point of your agreement term, however, it's much better to do it later into an agreement. This is because there won't be much difference in terms of agreement length or the amount of money you will save on your payments that can be negotiated early into an agreement.
How do I refinance my car loan?
There are a number of steps that need to be taken in order to refinance a car loan.
- You will need to contact your existing finance provider and ask for the total outstanding balance on your account.
- Then you will need to get a quote for your refinance package - Broker4Cars and our partners can provide this.
- The refinance application will be the same as the original application (with the same checks and requirements), so you'll need to have the same paperwork and proof of income that you needed for your original deal.
- When you have a new refinance package approved, you will need to pay the outstanding balance on the original finance agreement. The team at Broker4Cars can help guide you through this process.
How Broker4Cars can help
If you're considering getting refinancing your car, then Broker4Cars can help you secure a better deal.. Simply contact us on 01773 512806 or fill in the below form to see how we can help you.
