Before you get acquainted with the disadvantages of auto-refinancing, let me take you through what auto-refinancing truly means.
Auto-refinancing is a process that involves a vehicle owner switching loan financiers or lenders in order to modify the loan acquisition terms to favor him.
This can be done when your credit score is in perfect condition and it can only be feasible when you change your lender. In a case where you prefer to remain with the same financier, you must first change your loan package.
Things you Need to Know Before Refinancing
Check the Age of your Vehicle:
Cars depreciate just like every other machinery or equipment. Therefore, you should be aware of the fact that the useful life of any vehicle is a determining factor of its worth.
Car dealership and car loan funding institutions are very particular about this yardstick for calculating their loan valuation, and interests.
When you are making your enquiries, ask about their rates corresponding to the vehicle age. That will prepare you beforehand to make your final choice of refinance company among the lot.
Investigate the Lender’s Integrity:
Aside from your car age, it is wise to find out whether the new lender you have chosen has a reputable record of rendering services to their customer base.
Investigate from the right sources before you settle for the one you choose. Past criminal records and poor work ethics are extremely bad qualities of any company let alone a financial organization/outfit. Be on the lookout for a reliable lender to do business with.
Measure the Repayment Conditions:
You may be lucky to find a new lender that is ready to let you pay up your loan within a shorter period than your previous or existing contract.
You may also be lucky enough to find one that will permit you to spread your repayment over as long as 2 or more years to suit your financial capability.
Overall, it’s your convenience that matters most. Just don’t jeopardize your comfort and budget freedom.
New Lender’s Terms:
Weigh the terms and conditions stated on the lender’s website or their contract documents before you enter any binding agreement.
Different companies have distinct and peculiar principles guiding their regulations and laws. The standard of lender A will be totally different from that of lender B.
So, you must ensure you check and re-check, compare and contrast before you dive head-in.
How Advisable is Auto-refinancing?
Thinking about engaging in this ordeal requires your total commitment and readiness. If you are not sure about what you really want, it is best not to take any step you may end up regretting later.
After considering the above criteria before embarking on the process, you may now listen to any counsel or advise related to auto-refinancing.
Now, let me give you an insight on the benefits of auto refinancing to know what advise to take and which to discard to avoid you making grievous mistakes. These benefits include:
Minimal Interest Rate:
A lower interest rate is usually the utmost reason for opting into auto-refinancing in the first place. How convenient would having the opportunity to settle your loan in bits sound? Super convenient huh? Yes!!! That is exactly what auto-refinancing provides.
Flexible Repayment Policy:
Did you know you can pay at your own pace with auto-refinancing? It is best you refinance your car to avail you the ability to spread the loan repayment over a convenient period to favor your pocket and budget.
Timeless Choices can be Made:
If you wish to pay up your loan either within a shorter or longer period, it is left for you to decide. It is wise to make life easier for yourself. Make your plans based on your existing budget and the income you earn.
Is Auto-refinancing Really Bad?
The advantages of auto-refinancing far outweigh its disadvantages. Therefore, knowing that, it is clear enough to conclude that refinancing your car is not a bad idea. Refinance your car having it at the back of your mind that you are doing a great thing for yourself and finances.
While you are at it, find out about other benefits you could enjoy from your new financier.
Although there are few cons regarding auto-refinancing which you must know. They all point to the same key drawback which is really not a disadvantage when critically considered.
Let’s take a peek into that key drawback:
An Extension of Loan Repayment Tenure:
It is true that when you opt for auto-refinancing, you end up repaying for a longer period and probably pay a higher amount as the overall package but what you may not know is that you are indirectly enjoying a benefit simultaneously.
Take note of the fact that you are able to pay lower interest rates in installments at your convenience.
Hence, that single benefit is large enough to gear you towards conceiving the supposed disadvantage as no big deal at all. Let me emphasize that your aim is of utmost importance here.
So, disregard any thought of having your payment period prolonged. As long as your credit score is towering above average after the refinance setup, then you do not need to worry about anything else.
You must take into consideration what to do to avoid being on the losing end while you are revising your previous contract to favor you. Remember, it should be a fair deal, favorable to you as the customer.
Even as you are the one doing the spending in this situation, you must be wise. Weigh every single factor and compare between different car dealers and their packages. Also check every available bank or financial institution to know which provides the best terms and conditions accompanying loan grants.
You are your own financial adviser. In fact, the best person to employ as your counselor is YOU! But only after you must have done in depth research on the particular issue of concern.
Therefore, now that you have equipped yourself with substantial facts on the disadvantages of refinancing a car, you are 100% ripe for an auto-refinance adventure!!!