It’s no secret that struggling with debt can make you feel like you’re drowning in waves of negative dollars, but there are certainly ways to improve your relationship with loans. Considering your financial options, such as refinancing an auto loan, can help with working your way toward a better financial future. Doing so involves taking on a new loan to pay off the balance of your existing auto loan. Most of these loans are secured and paid off in fixed monthly payments over a predetermined period of time.
Unsure if this could be a good option for you? Think One is an established provider of commercial vehicles in Singapore, and this article explores why refinancing your car loan could be beneficial for your finances.
Lowers your monthly payment
Refinancing can be helpful in reducing a monthly car payment that’s too large for your budget. A lower payment can free up funds to pay off higher-rate debt. It can also help you through times of financial difficulty, such as a sudden drop in income. Alternatively, if your income has increased, perhaps you can then afford a higher payment. If you manage to find a lower interest rate and can shorten your term, this can lead to savings in overall interest even if your monthly payment increases.
Reduced interest rates
Interest rates change regularly, so there’s a chance that rates could have fallen since the time you took out your original auto loan for your commercial vehicle. Even a drop of 2 or 3 percentage points may result in significant savings over the span of your auto loan. If the interest rate you qualify for today is significantly lower than your current loan rate, it may be a good time to consider refinancing a car instead.
Your credit score has improved
Credit scoring awards points for factors related to your debt and how you repay that debt, such as on-time payments and length of credit history, all of which helps lenders predict who is most likely to repay a loan. When you first purchased your commercial vehicle and applied for an auto loan, your score might not have been the most ideal. But with time, you could have worked to raise its score and improved on it, making you now eligible for a lower interest rate auto loan.
You’re having trouble with bills each month
Recently bought a prime mover truck or a commercial vehicle for your business? Even if you might be unable to secure a lower interest rate, it may still be worth trying to find a loan with a longer repayment period in order to reduce your monthly payments.
If you are unable to find a suitable loan, you may also be able to renegotiate the repayment period on your current loan. That said, keep in mind that more time spent paying back your loan is also more time spent paying interest.
Refinancing your auto loan is an excellent option because it provides some relief from high-interest rates and can help one to manage debt more effectively. Keep these tips in mind when deciding on the most suited auto loan for your financial preferences.
Got more questions? Think One carries an extensive selection of commercial vehicles ranging from primer movers for sale, and even used commercial vehicles. Reach out to our team today to find the best one for your needs!