In this post-pandemic era, people may be putting great efforts into saving money. Some may consider refinancing their car loans to do so. It is very understandable when people turn towards this option because the current situation has led to an extreme financial crisis. Wondering if you should refinance your car right now or not? But, Keep in mind that any abrupt decision made in a crisis can lead to everlasting regrets. 

Refinancing With Different Loan Terms 

Do you wish to lower your monthly payments due to financial complications that have surfaced due to COVID-19? Don’t rush to refinance your car loans for this purpose. Refinancing means taking out a new loan with a better interest rate or a longer-term, replacing the current auto loan. People choose to refinance to reduce their monthly car payment amount. 

Refinancing requires you and your vehicle to qualify a set of requirements. If you wish to pause your monthly payments due to coronavirus, then it may be impossible. However, you are most likely to qualify for a longer-term loan plan only. And it would cost you more than the actual loan balance. 

Qualifying To Refinance a Car Loan 

If you wish to qualify for a refinanced loan, your previous loan must be at least one year old. Besides, your credit score must have improved since then. You must also have equity in your vehicle. If you don’t meet these conditions, consider yourself unfit for refinancing. 

In addition to this, your vehicle must have a good mileage (probably less than 100 000). Your car must also have an age that fits the lender’s criterion, and they must also agree to pay off the loan balance. Every lender looks for varying qualifications, so not every lender is right for you.

The last condition is to be actively sending your monthly car payments. If you end up missing even a single payment in COVID-19, then you are not fit for refinancing. But, such an option would help you greatly in draining times like these. 

Alternatives to Refinancing

The bitter truth is that refinancing is not for every borrower out there. The good part is that the lenders are kind enough to help the borrowers with any needed help, especially when the global economic situation is going downhill. Give a valid yet true reason for your missed monthly payment to the lender so that you end up on the good side of the lender. 

It is crystal clear that every lender tries their absolute best to prevent loan default as much as you do. Because of the global pandemic, lenders have granted slight leniency in this regard. Many borrowers also try to postpone the monthly payments that they weren’t able to wear. It doesn’t allow you to forget about the missed payment because you will be paying this amount at the end of your loan. 

Ideally, the deferment lasts for about 30 to 90 days, conditional to your and the lender’s current situation. But due to the COVID-19 pandemic, changes have been made to this time limit. Some lenders are lenient enough to give a 120-day deferment period to their customers. Contact your lender to avoid any confusion regarding your monthly payments. You can also ask them what the deferment limit is in their case. 

If the above suggestions don’t help you save, trade in your car for something more affordable. It is the only route that would help you ease the strain of auto loan payments. 

Find a Dealership near You

Have you accepted trade-in as the ideal option for you? And now you don’t know how to initiate the trading process? We have got your back! We, at CarLoanRefinancing, are interconnected with a network of reliable and user-friendly dealerships. They specialize in aiding credit-challenged customers with the best suggestions and deals ever.

We know, looking out for transportation may not be on the top of your priority lists, but it is a basic need. You can start the buying process by navigating through online car ages and selecting the ideal car for yourself. And when the current situation subsides, you can contact us, and we’ll arrange the best lender.