By getting people the loans they need, I can help them reach some financial security. My loans help people by new cars, extend their house and consolidate expensive debts. Once they get their money issues under control they start to do better in all aspects of their life, they have better relationships and start doing better at work. It's great to be the catalyst for positive change in my clients life. If you are also in the financing industry or a client wanting to understand how financing works, please read on. This site is an exploration of how we decide who to lend to and how much we can lend them.
Many people know a lot about refinancing their home mortgages but some do not know about car loan refinancing. Consequently, they miss an avenue through which they can access funds for other activities like settling urgent medical bills. This article discusses some factors you should have in mind as you refinance your car loan:
Your Average Car Ownership Duration
Many people never owned a given car for very long before trading it in for another one. As you consider refinancing your car loan, think about the length of time you usually take before you feel the urge to buy another car. That timeframe is very important because it will guide you on the duration of the car loan you should get.
For instance, if you normally buy a car every five years, the car loan you obtain should not exceed five years. This is because it may be hard for you to get any money out of the sale of your car if the loan has not yet been paid off.
The Interest Rate at Which You Bought the Car
This is another important factor to look into. If interest rates are higher than they were at the time you bought the car then it is not wise to refinance that car loan. This is because you will be paying too much (in interest and administrative costs of the loan) for the money you get. On the flipside, if rates have plummeted then it makes financial sense to refinance since you will lower your overall indebtedness by obtaining a cheaper car loan than the one that you used to buy the car.
Monthly Deposit Vs Long Term Cost
Many people only look at how much they will be required to deposit as a monthly payment when they refinance their car loan. This focus may be misleading because it does not give you the full picture of what the total repayment amount will be. For instance, a monthly repayment figure of $200 for 60 months may seem very affordable but when you realize you will pay a total of $12,000 in addition to administrative costs then the loan no longer seems very attractive.
Contrast this with another person who makes $300 monthly payments for 36 months. That person will pay $10,800 plus an administrative cost. The lesson here is that you should look beyond the monthly payment as a determinant of how good a car-loan refinance product is. Look at the bigger picture instead.
When you think carefully about the issues above, you will be in position to shop for the best car-loan refinancing that will not drain your finances. To learn more, contact a company like SMA Finance.