Car ownership in Australia is synonymous with freedom. In this big, wide country, owning a car means having the ability to get where you need to go on your own schedule. In some of the more isolated parts of the country, it’s a basic need for survival.
While purchasing a house is typically the biggest financial decision we make in life, buying a new or used car is most often the second. Especially when you factor in things like running costs, ongoing fees and loan interest rates.
So, if your personal circumstances change or the monthly fees of owning your beloved vehicle start to hurt your hip pocket, you are left with two options: sell the car you love (and lose your freedom) or try to find a better deal with a new provider to save money.
How the car loan refinancing process works
With more and more people experiencing increased financial stress, it makes sense to see if and how you can lower the monthly repayments of your current car loan to save money. When many people begin down the path of reconciling their financial situations, they’re unsure if it is even possible to change their car’s existing loan over to another provider.
You might be worried about getting slugged with things like early exit fees from your existing lender, or you might have questions about moving over to a new finance provider.
We’re here to tell you that it is possible to change your car finance over to another credit provider, and that the process itself is actually very similar to when you applied for a loan in the first place.
Changing your car finance company is a relatively easy and straightforward process, it’s a wonder more people don’t use this to their benefit. Shopping around for other lenders with a better interest rate is a surefire way of saving you money by reducing your monthly car loan repayments.
Refinancing your car loan with Driva is simple, and we can assist you with every step of the refinancing process - plus we’re committed to finding you the best rate possible! Simply use our smart platform to find all of your best eligible interest rates from across our panel of 30+ lenders. Just click ‘I want to refinance my vehicle’, fill in a few simple details and we’ll do the leg work for you.
What are the benefits of changing car loan providers?
The biggest benefit of shifting to a new lender is that it can help save you a significant amount of money over the life of your loan. Finding a new loan that offers a better interest rate, lower fees or more attractive loan terms can really improve your individual circumstances each month.
If you are someone that always makes their secured car loan repayments on time and has a good credit score, it might be possible to renegotiate a lower interest rate on your existing car loan with your current provider. However, the first step is to do your research. See what other providers are offering in terms of interest rates and loan terms. You will be surprised at how easy it is to find options that suit your own circumstances better, and how quickly you can do so with Driva.
For instance, it is possible to change the tenure of car loans. What does this mean? - I hear you ask. Put simply, it means negotiating a longer loan term which will help reduce your minimum monthly repayments. Obviously, a longer loan term means you have more time to pay out the finance on your car, which will help reduce your money outgoings each month. However, this approach will add to the total cost of your car as you will be paying more in interest.
If you are refinancing to save on expenses, it’s important that you inquire with your existing provider whether changing your car loan to another provider will result in any you have to pay to switch over, such as early repayment fees.
What are the drawbacks of changing car loan providers?
Going with a new credit provider can seem pretty appealing: lower fees, less interest to pay, and better loan terms. However, there are certain things you’ll need to understand first before you make the decision to switch.
Going with a longer loan tenure could result in you paying more interest over the life of your loan, adding to the overall cost of your car. Yes, you may have secured a lower rate of interest; however, an extended loan term may cancel out any potential savings, and end up costing you more.
Paying out your loan early and switching to a new provider can mean that you have to pay exit fees. Not to mention any loan application fees or other charges involved in securing a new loan. As you can see, it’s vital that you do your homework and research all the options properly before making the decision to switch loan providers.
When it is time to take control of your personal finances, you may be weighing up whether or not to sell your current car, payout any money owing and move on to a cheaper, different car.
However, you don’t have to go through all the hassle of buying a new car when you can refinance. If you love your vehicle (which is why you probably bought it in the first place) it is possible to refinance your loan. If you can find a new provider offering a lower interest rate than what your current lender is offering, it might be time to weigh up your finance options and make the switch.
Not only could this leave you in a better financial position each month by having to pay less for your car, but you also get to hold onto your existing pride and joy! Of course, it all comes down to doing your homework in weighing up your options. Here are some questions to ask when trying to decide if refinancing your car loan is the right option for you:
- What is your current financial situation?
- What is the current market value of your vehicle?
- Do you really need to sell your existing vehicle and buy a new car?
- Do you need a new car loan?
- Are there additional fees for exiting your current car loan?
- Are there any other applicable fees?
- Can you find lenders that offer more attractive terms?
- What exactly is the new product provider offering?
- Do you need a fixed rate loan?
- Can you get an unsecured car loan?
Throughout history, the car has symbolised freedom. Nowadays, with the potential to refinance car loans, car owners can gain a greater sense of financial freedom and improve their overall financial situation by working with a new lender to access lower repayments or more favourable loan terms.