Many people believe that they must wait a specific number of weeks or months before considering refinancing their homes. Others put off refinancing their automobiles until it no longer makes financial sense to do so. Here’s what you need to know about when to refinance your home.
- You can refinance your car as soon as you purchase it. If your credit score is high enough and your financial picture is strong enough, you may be able to refinance your vehicle and get a better deal than the dealer-arranged financing. In some states, you must first complete the tag and title steps before proceeding with the process. However, in the majority of cases, you will not be required to wait any longer. You must continue to make payments until you’ve secured refinancing, however. You shouldn’t assume that just because you’ve started the process and received a firm offer of refinancing that it’s okay to put off payments. Alternatively, you may decide at the last minute that you do not like the new loan terms or that you want to shop around more. You don’t want to put your credit in jeopardy or put yourself at risk of repossession by failing to make your current payments on schedule.
- Don’t put off pursuing a refinance for an extended period. When it comes to refinancing a car, there are typically only two situations in which it is too late. The first time this happens is when you’re getting close to the end of your loan term. You may be tempted to start a new loan term of five to seven years if you have only two years left on your current car loan, but is it worth it when you have paid off your car for three years? In the case of refinancing a vehicle that you’ve leased because the lease term is coming to an end and you want the vehicle, the only exception is if you want to keep the vehicle. You should make certain that you will not end up paying more for the vehicle than it is worth by extending the loan repayment terms for an additional year or two. For financial reasons, it’s best if you can trade-in your current vehicle for a less expensive one if you need to reduce your car payment late in your loan term. If you’ve had your car for a long period and it has lost significant value, you’ll be upside down in your new car loan because your new loan is greater than the value of your car, which is another situation in which it is too late to refinance your loan. That is exactly what you do not want.
Knowing how to refinance your car properly is essential to getting into a better loan in the first place. Use these tips to secure the new deal you require after conducting thorough research and preparation.
Use the refinance car calculator to get an idea of how much your monthly car loan payment will be or how much money you will have available for spending.
Sometimes the best option for refinancing a car loan isn’t a car loan at all; instead, it’s a different type of loan. A home equity loan can also be used to finance the purchase of a vehicle. A secured loan secured by your home may have a lower interest rate than a personal loan or even dealer financing, but the term may be much longer than a car loan refinance or a personal loan, which means you may end up paying more in interest throughout the loan. Make certain that you understand all of the terms of the loan.