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Refinancing a Car the Easy Way

May 3, 2016

Have you taken out car finance, but your situation has now changed? If so, you may be left asking ‘how and why should I refinance my car?’ Today, we’ll be talking you through why an auto refinance loan may be the ideal option for you.

Refinancing a car

Can I refinance my car?

Car refinance isn’t for everyone, but it can be a convenient way to save you money. Taking out a car loan with a fixed interest rate may have been the best deal 12 months ago – but since then, interest rates may have dropped. Instead of paying off your original loan, refinancing a car can save you money overall – guaranteeing that you’re getting the best available rate.

But does refinancing a car hurt your credit? The simple answer is no. In actual fact, refinancing can help you to maintain your credit score, even if you get into financial hot water. Financial setbacks may mean that the loan you initially applied for just isn’t viable anymore. Rather than falling into the red and missing payments, refinancing allows you to increase the loan term and, subsequently, lower your monthly payment.

After a long period of time with the same car, you may be ready for an upgrade. The deprecation of your car may mean you owe more than your car is now worth – making it trickier to settle your finances before selling up. If a ‘voluntary termination’ or using your savings to pay the difference isn’t suitable for you, car refinance can give you a top-up loan to help you on your way to a new motor.

How to refinance a car loan with bad credit

It can feel like an ongoing battle trying to get accepted for car finance when you have a less-than-perfect credit score. But refinancing a car loan with bad credit doesn’t have to be as intimidating as it sounds – and it can actually help you to get a better deal. By taking out the original car loan, your credit score is likely to have improved over the course of your repayment period. Lenders reduce the interest rate for lower-risk applicants, so a car refinance loan with your healthier credit score means you’re likely to qualify for a lower interest rate.

Find out more about bad credit car finance.

How does refinancing a car work?

Refinancing a car means replacing your current car finance with a new loan under different terms and, often, a different APR rate. The process of refinancing means that the new lender will pay off the outstanding loan, and create a new contract for you – meaning that refinancing makes it possible to remove or add a co-signer on the contract, as it is entirely separate to the original car finance deal.

refinancing a car loan with bad creditrefinancing a car loan with bad credit

Can I refinance my car with the same lender?

The process of refinancing a car means the original contract is settled and terminated, often by a new lender. However, The Car Loan Warehouse offer a hassle-free car refinance service, meaning you can switch to a more suitable contract without having to change lenders.

Whether you’re refinancing a car loan with bad credit or just think an auto refinance loan makes economic sense, refinancing a car with The Car Loan Warehouse couldn’t be easier. Call our friendly advisors today on 0800 066 288 to discuss your options, or apply online for a refinance deal with The Car Loan Warehouse.

For a quick online quote, use our car finance calculator to see how we can make refinancing a car work for you.

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About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.