Car loan refinancing, all you need to know
While your car loan may only run over a couple of years, that doesn’t mean you shouldn’t take the chance to compare some of the best car loan rates around and potentially make the switch to a better value deal. Refinancing is that easy. It’s simply making the move from one car loan to another and hopefully saving you some money along the way. It might seem like a hassle, but with our handy car loan comparison table you’ll be able to compare some of the lowest car loan rates around with a single glance, to see just how much you could save.
What should I consider before refinancing?
With plenty of low car loan rates on the market below 6.50%, now could be the time to do a rate check with your own car loan rate. But hold up one minute! Before you start the process of refinancing and making the switch, make sure you consider any fees you’ll need to pay. It can also be worthwhile weighing up whether car loan refinancing is the most convenient option for you to take, after all, making the switch might not be worthwhile if you’re already four years through a five year loan.
So if you’re considering refinancing your car loan, make it easy for yourself by using our handy car loan switch and save calculator. By plugging in a few simple details about your current loan and provider, our calculator will be able to show you just how much you could save on your car loan repayments if you were to refinance.
Just how much would refinancing save me?
Every car owner with a loan is going to be in a different situation when it comes to how much they’ll be able to save by refinancing. It may even be the case that you won’t be able to save at all because you’ve already bagged yourself one of the best car loan rates around. But in case you haven’t, here’s an example to illustrate the benefits refinancing your car loan could have on your wallet.
Two years ago, Emma and her partner purchased a second-hand 2015 Mitsubishi ASX. In order to buy it, they took out a car loan with an interest rate of 8.21% on which they still have $20,000 left to pay. Even taking into account a $200 upfront fee, if Emma made the switch to a low rate car loan with an interest rate of 6.50% she would end up saving $365 over the final three years of her loan.
Interested in finding out how much you could end up pocketing yourself by refinancing? Enter your current car loan figures into the Mozo car loan switch and save calculator to get started.
What documents do I need to refinance?
Because you’ll be switching lenders when you refinance your car loan, you’ll need to have a few documents ready to go in order for the approval process to run quickly and smoothly.
- Identification: Whether it’s your car loan or credit card, with any financial application you make you’ll need to prove that you are who you say you are. That’s why you should have some sort of identification, like a drivers licence, passport or your medicare card, at the ready when you’re looking to refinance to a new car loan.
- Address: Aside from your identity, you’re new lender is also likely to ask you to provide proof of your address. If you own your own home then a mortgage statement will do the trick, while if you’re renting you’ll need to fish out your tenancy agreement or even a bill or council notice with your address on it.
- Finances: You’re taking out a loan after all, so you’re going to need to provide your new lender with some proof that you’ll be able to pay them back. This means offering up something like a payslip, or series of payslips, to show your ongoing income, as well as a savings account statement from your bank to demonstrate proof of savings. Your new lender may also ask you to provide records of any debt you currently owe.
- Insurance: Depending on the lender, you may also need to provide proof that you have a comprehensive car insurance policy on the vehicle which you’re seeking the car loan for.
Are there any catches to refinancing?
Of course. Sometimes the car loan rate you’re currently getting could be very competitive, or it might just not be convenient for you to make the switch if you’re at the end of your loan period.
On top of rates and convenience, you’ll also need to factor in any exit, sign up or ongoing fees you’ll need to pay if you switch from one loan to another. Not all car loan providers charge fees, but for those that do, you could be looking at hundreds of dollars in costs. For example, car loan sign up fees in the Mozo database range anywhere from $0 to $995.