Refinancing is simply the process of replacing an existing loan with a new one that has a different rate and / or period. Can you refinance a car loan with the same bank?
The answer to the question of whether you can refinance an automatic loan from the same bank: it depends. Although this is only sometimes possible, you should always consult your current lender first if you are considering refinancing. Your current lender is a great place to start when you need to refinance a car loan. If you have met your payment deadlines and are in good standing, they may consider refinancing your current loan.
However, the lender is not always able to do this. In these cases, you probably have other options you can turn to – especially if your loan has improved since you originally borrowed or your interest rates dropped.
If you can’t stay with your original lender, a credit union is a good place to start refinancing. If you are worried about low credit levels, you can sometimes get around this, especially if you are a member with a good reputation. Credit unions are usually easier to obtain than in a bank.
You can also apply to an online lender. Our trusted partner will help you find and compare refinancing offers in the comfort of your own home. Just complete the secure refinancing application form to start now.
Another thing to consider is why you want to refinance. It is worth considering whether you want to stop your vehicle, as well as:
- The main interest rate has fallen,
- You want to reduce your monthly repayment by extending the loan period,
- You did not get the lowest interest rate that you now qualify for.
If these scenarios do not agree with why you want to refinance, you may have more things to consider before changing your car loan.
What is needed for refinancing
To refinance an existing loan, you need:
- A new loan with better terms or prices than an existing car loan
- Detailed information on the current loan, including the current lender, account number and loan balance
- Information about your vehicle, including make, model, year and VIN
- Documents of repayment ability, eg Pay slips or tax returns
The best reason for refinancing: Pay less interest
If you can borrow at a lower interest rate, it may make sense to refinance. This lower rate (assuming all other things are equal) means that you pay less for the car after all external financing costs are included. Since the interest rate is also part of the monthly payment calculation, the required payment should also decrease. As a result, your monthly cash flow becomes easier to manage.
If you can replace an existing loan at a lower rate, it’s best to refinance as soon as possible. Most auto loans amortize loans, which means you pay a fixed monthly payment with built-in interest costs.
You pay back your debt over time, but most interest costs are paid back at the beginning of the loan – so lower this rate sooner than later to start lowering costs. The depreciation table shows you exactly how much you can save by refinancing.