Over the years, purchasing a car has been made much easy, owing to a number of financing firms and banks available in the market. Every individual is tending towards financing the car as the interest rates and EMI schemes are highly flexible and do not pinch the pockets of a buyer. Amidst the bundle of schemes and finance proposals launched by several firms, there is also an option of refinancing. Car refinance helps a person to increase his/her savings annually and avail the benefits of this facility. However, there are certain guidelines, one should keep in mind before planning to opt for auto refinancing. These are as follows:
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Before opting for car refinance, one should examine the terms and conditions of the existing car loan. People should calculate what exactly they are paying as per the current rate of interest and how much of the loan amount is pending. Few of the banks include pre-payment penalty in their loan's clauses and therefore, it must be enquired from the concerned corporation about the same.
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One should also do a thorough analysis if their vehicle even qualifies for the auto refinance schemes. Generally, the banks and financing firms do not offer refinance option for the cars, which are either 6-7 years old, are used commercially or have done more than 1 lakh km. Also, few of the financing companies also define the limit of the loan amount, which is pending on the car. The same must be asked from the firm and after that only, the decision of refinancing should be made.
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The interest rates offered by various firms usually keep falling and are variable. This might tempt the customers to opt for the refinancing option but before going ahead, they should compare the car loan interest rates available through all the firms. The conditions and regulations associated with the loan scheme must be read carefully and then only they should be opted.
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After doing all the calculations, if the refinancing option is still needed then the concerned bank or firm should be contacted. The vehicle will be re-registered and the title will be transferred and after producing the documents, such as old car loan papers and car's documents, the loan will be sanctioned.
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It is also recommended to enquire from the bank if they are the ones sanctioning the car loan or is it being done through another firm. Generally the banks contact other firms in case of refinancing and might even turn some of their customers down for this option. In such a case, people can always improve their credit score and also if they have maintained good relations with the bank, then the process might become easier.
However, experts suggest that planning for a refinancing option is generally beneficial if the car is relatively new. This is due to the fact that new cars are easy to refinance as their estimated market value is higher than that of an old or used car. Still, the used car loan rates must be researched through different banks and authorities as any specific scheme might come handy for refinancing old vehicles.
