How Does Refinancing a Car Loan Work?

How Does Refinancing a Car Loan Work

Whether you have good credit or bad credit, our team at Good Fellow’s Auto Wholesalers is here to inform you about how refinancing a car loan works. With refinancing, you may qualify for a lower interest rate without having to wait until the end of your Used Car Loan term. In fact, through refinancing you may be able to save hundreds or thousands of dollars. Let’s get into it.

Refinancing a Car Loan

If you are not familiar with how refinancing a car loan works, we are here to define it. Essentially, refinancing takes the balance of the auto loan that you need to pay and negotiates its terms. The amount one has to pay remains the same, but the terms can change. Typically, this process works in the car owner’s favour as they can enjoy a new lower monthly payment or, they enjoy a better interest rate that saves them money.

Should I Consider Refinancing?

If your financial situation has recently changed and has improved, refinancing may be a good option for you. If your credit score has increased since your last credit application was processed, you may qualify for a new, and better interest rate. If you can get your current interest rate dropped by just 2%, this is still worthwhile as it can save you hundreds or even thousands over the term of your car loan.

Who Is a Candidate?

Although there are many people who wish to refinance their car loan, there are certain criteria of eligibility that have to be met in order to be considered. Every lender may have slightly different terms but generally, you can expect the following:

  • Be able to prove a source of revenue
  • Have a debt-to-service ratio that allows you financial flexibility
  • A credit history and minimum credit score
  • Home address

What Documentation Is Needed to Refinance?

The process of refinancing a car loan is fairly straightforward. The information that you will need to begin this process is the same documents that you provided when you completed a car loan application. Documentation includes:

  • Photo identification
  • Vehicle information (Ex. year, make, mileage, model, etc.)
  • Void cheque or banking information
  • Current pay stub or tax return documents

Refinancing Benefits

There are many good reasons to decide to refinance. Some of these include that you can obtain a lower interest rate, you can extend your loan terms to reduce the monthly burden, or you can remove a co-signer from your account. If you wish to take advantage of any of these opportunities, it’s time for you to consider refinancing your car loan.

How We Can Help

While there are many used car dealerships in Toronto, our team at Good Fellow’s Auto Wholesalers is the most trusted and reliable dealership that you will want to work with. If you wish to refinance your car loan, our team of auto loan experts is ready to make it happen. Contact our team today at 1 (855) 581-9590 to book a consultation!

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