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Refinancing a Car Loan in Cambridge Ontario

Refinancing a Car Loan in Cambridge Ontario

Refinancing an auto loan is something anyone can do at almost any time but there are specific instances when you can benefit more than others. Refinancing isn’t for everyone, or every situation but it’s definitely something to consider if you need to change your circumstances. We asked our Cambridge auto loans team to come up with the main reasons to refinance a car loan that could benefit you.


Refinancing an auto loan in Cambridge


Everyone and every situation are different but our motivations for doing things are largely the same. We can think of three main reasons to refinance a car loan.


To lower monthly loan payments


Lowering your monthly auto loan payments is by far the most common reason for refinancing.


You can refinance the loan to a lower amount if you have equity in the car or you can extend the loan term so you have longer to pay it off, which lowers monthly payments.


As long as you have a good credit score and equity in the car, you can reduce the loan amount, making it cheaper.


Be aware though that extending the term makes it cheaper each month but more expensive over the length of the loan as you’re making more interest payments.


To benefit from lower interest rates


If you can access lower interest rates than you’re paying now, that’s another good reason to refinance.


If auto loan rates have reduced enough to make refinancing worthwhile, that’s another popular way to save money each month. Lower rates mean paying less in interest, with obvious benefits.


Another way to use lower rates is when switching between a bad credit car loan and a standard loan. If your credit score has improved enough to access standard borrowing, you could make significant savings per month.


To consolidate debt


Our final option is another popular reason to refinance an auto loan, to consolidate other debt.


If you have equity in your car and have other debts you’re paying each month, you can borrow more against the car and pay off all your debts at once. This will make your auto loan more expensive but make your overall debt more affordable.


This will only really work if you can pay all, or the vast majority, of your other debt in one go. Otherwise, the effect is diluted.


Should you refinance a Cambridge auto loan?


Refinancing an auto loan is a viable option in many situations. It is situation dependent though and isn’t useful for everyone.


If you’re a couple of years into your loan and have a good credit score, refinancing can be an option. If you need to pay off other debt before you get into trouble, it can be an option.


It isn’t universally helpful though so it’s best to get some expert advice before you make the leap. Contact one of our team to discuss your situation.


If you need help or advice on anything to do with auto loans in Cambridge, contact Car Nation Canada today, we can help!


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Categories: Car News