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.
Can You Refinance a Car With the Same Lender?
In general, refinancing a car loan with the same lender is a relatively straightforward process. Most lenders will allow you to refinance your existing auto loan and replace it with a new loan with a different rate and/or term. This can help you save money by reducing your interest rate, or by extending the loan term and lowering the monthly payments.
However, there are a few important things to be aware of before refinancing your loan with the same lender. First, the lender will likely run a credit check to determine your eligibility for the new loan. This can potentially have an effect on your credit score, so it’s important to understand the potential consequences before taking this step.
Second, the lender may require you to pay any remaining loan fees and penalties associated with the original loan. This can add to the overall cost of refinancing, so make sure you understand the full scope of the costs before moving forward.
Finally, you should also consider the long-term implications of refinancing with the same lender. Depending on the terms of the new loan, you may end up paying more in interest over the life of the loan. It’s important to understand the full cost of the loan before making a final decision.
Overall, refinancing a car loan with the same lender is a viable option for many borrowers. However, it’s important to carefully consider the potential consequences before making a decision. Make sure you understand the costs, the credit implications, and the long-term effects of the loan before moving forward.
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.