If you’re still holding on to an old car loan, it could be time to refinance and get yourself into a newer model. Here are five good reasons why:
You can save money
Refinancing can help lower your monthly car payments, especially if you’re carrying a high-interest rate on an old car loan. Even by just refinancing into another six-year loan at the same amount you are currently paying, you could save money each month due to lower interest rates. You can check with your current lender or look for new lenders online, like Driva loan refinancing, to see if you could access better rates elsewhere.
Trade your current car in for a new model
If your current vehicle is not in great condition or is starting to make funny noises, you’ll have the opportunity to trade it in for a newer model by refinancing. You can even combine your old loan into your new one so that you only have one monthly payment.
If you owe more than your car is worth, refinancing can help by reducing the total amount that you still owe or allowing you to access equity in your old vehicle if it’s higher than what you owed for it. So if you’re planning to upgrade to a newer model anyway, why not use your equity to help pay for it?
You can consolidate debt
If you’re paying more than $10,000 on multiple loans and credit card bills each month, you can use car refinancing to consolidate your debt into one, low monthly payment. Rather than dealing with multiple creditors who make it difficult to pay off the balances on time, you’ll only have one place to send your payments, making it easier for you to manage your money and make sure you don’t fall behind
You can lock in a low interest rate
If you’re not certain how long you’ll need to keep your car, refinancing could be a good way to lock in a low monthly payment and interest rate. It’s like taking out an insurance policy: Just like with health or life insurance, even if you don’t think you’ll need it right now, the peace of mind is well worth it should you find yourself in an unfortunate financial situation.
You can improve your credit
Even if you’re not planning to use it now, obtaining a loan with an auto-financing company will help increase your credit score. When you take out a car loan, the bank or financial institution reviews your overall debt load before committing to the new agreement. Refinancing might make it easier to meet your loan repayments, thereby showing your lender that you’re able to repay debt obligations (and making it more likely that you’ll be able to get approved for future loans).