If you’re not happy with the current deal you have on your car loan, you may want to think about refinancing. By checking out the competition and speaking to lenders, you may be able to negotiate a better deal on your car loan, saving you a heap of money in the long run.
Check your credit
It’s much easier to negotiate a refinancing deal when you have good credit. Good credit is like a bargaining chip. If you negotiate with lenders, they will look at your credit to determine whether they want to lend to you. If you have good credit, you will be seen as less of a risk, and you will usually be thought of as a ‘good’ customer.
Before you think of refinancing, check your credit file by applying online through a credit reporting agency such as Veda or Dun & Bradstreet. Check for any errors and have them corrected before going any further with your refinancing plans. If your credit’s not that great, you may want to think about improving it before refinancing.
Know what’s out there
Before you can start negotiating a refinance deal on your car loan, you need to know what the current car loan market looks like. If rates are down – lower than your current car loan rates – you may be able to negotiate a better deal. If rates are high, you may find it difficult to get a lower rate on your loan. Arm yourself with as much information as possible before you start talking to lenders.
Use a car loan calculator
It’s a good idea to use a car loan calculator to compare car loans on the market with the car loan you are currently paying off. This can help you work out how much you could save by refinancing. However, bear in mind that you may have to pay fees to refinance – so make sure switching will be worth your while.
Speak to your current lender
Before you start speaking to other lenders, talk to your current lender and say that you are thinking of refinancing. Mention the cheaper loans you have found elsewhere. If you are a good customer, your lender may be willing to match or beat other offers.
Start shopping around
If your lender is not willing to offer you a cheaper deal, start looking to other lenders and see what they can offer. Advise them of other loans you have found on the market, and mention that you have good credit (as long as you do have good credit!). Try to negotiate a good deal, and always read the small print before you sign.