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How Does Refinancing a Car Work?

Jul 14, 2022 | Car Loans

A low credit score usually results in a high-interest rate when you get a car loan. However, let’s say you’ve been punctual on loan payments and have improved your credit score. Even though your credit score has risen, your interest rate has stayed the same, so you feel stuck.

If you find yourself in this situation, it’s time to refinance your car loan. Auto refinancing can save you thousands and ease your financial burden.

We can assist with refinancing a car loan. Call Get Approved Canada today at (844) 584-5626.

Why Refinance Your Car?

Refinancing a car can be beneficial for people in several situations, including the following:

  • Improved credit score: If you’ve improved your credit score since you first received your car loan, you may be able to get a lower interest rate. Consider making a credit inquiry to see if you’ve improved your credit report.
  • Interest rates are lower: Even if you haven’t raised your credit score, interest rates may be generally lower. Therefore, you could receive a lower rate.
  • Better financial situation: Besides a higher credit score, you may have a better financial situation than when you first got your car. In this case, refinancing can be a good idea. Talk to your lender about restructuring the terms of your loan.
  • Difficult financial situation: Refinancing your car loan can also help if you’re in a difficult financial situation. Specifically, you may be able to extend your loan term. A longer-term can lower monthly payments and ease your financial burden.
  • Adding or removing a co-signer: Refinancing your car loan also allows you to add or remove a co-signer.

Why Not Refinance Your Car?

Conversely, refinancing your car may not be a good idea in certain situations. For example, let’s say you’re at the end of your loan payments. At this point, you will likely not experience many refinancing perks and will end up paying fees for no reason.

Alternatively, perhaps your car is at the end of its lifespan. So, you probably won’t get approval for refinancing. 

In any case, refinancing is not for everyone. Consider your credit score, financial situation, and current loan terms before you refinance your car. 

How to Refinance a Car Loan

If you’ve decided that refinance can benefit you, the next step is to qualify. To do so, you’ll need:

  • Proof of income
  • Proof of financial ability to take care of payments, ideally not incurring prepayment penalties in the process
  • Credit score and history
  • Proof of residence

If you meet these criteria, contact a lender to see if you qualify for auto refinancing

Refinancing Your Car in Ottawa

By refinancing your car, you could save thousands of dollars on your loan payments. Refinancing could be your ticket to a lighter financial burden, whether you’re thriving or struggling financially.

At Get Approved Canada, we make refinancing a car loan as straightforward as possible. Visit our website and take a quick survey to see if you qualify.

Call Get Approved Canada today at (844) 584-5626.

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