With the changing nature of automotive industries across the world, it’s natural to be unsure about your decision to finance a vehicle. If you’re in a situation where your current loan terms don’t complement your financial situation, it may be time to consider an auto refinance. However, if you do not wish to change your current lender for any reason, it may be possible to renegotiate the terms with the same lender.
Is Refinancing With the Same Lender Worth It?
Even though it’s possible to refinance a car with the same lender, it’s not usually recommended. Your interest rate and a huge chunk of the terms are based on your credit score, your lender's terms, the debt-to-income ratio, and your finances. If you think your credit score has considerably improved over the last few months, it's better to look for a new lender.
The reason it's recommended to shop around for a new lender is that you may end up with a better deal and save more money. It's also important to review your current terms with your existing lender, as paying a loan off earlier may also result in penalization.
Now that you know that auto refinancing is possible with your existing lender, it’s worth noting all the benefits it may accompany:
- You may have a chance at lower monthly payments
- You can reduce or extend the duration of your loan
- You may come across a lender who’s willing to provide you with better payment options
- You may get a better deal in terms of the interest rate
One of the best things about shopping around is that there is no limit to the number of lenders you can come across. No matter how crucial your relationship with your existing lender may be, it may not always land you an ideal deal. The whole purpose of refinancing is to get a better interest rate, payment options, and a suitable length of the loan. However, if you're getting a deal only slightly better than your current one, then it may be time to explore other options.
The Bottom Line
The world of car refinance is filled with limitless opportunities. What seems like a great deal to you now may just be an ordinary affair made to look extraordinary. Hence, we recommend shopping around before settling for a new deal with an existing lender, especially when it comes to auto refinancing.