Should I Refinance or Buy a New Car?

Do You Love the Car You Have?

The most important question; do you love the car you have? If you do, then you’ll want to consider refinancing as this will allow you to keep driving the car you already have and hopefully, with a lower monthly payment and better terms than you originally managed to secure. ‘Why waste your money on another car that you may or may not enjoy, when you can just as easily refinance the car you already have and save a lot of money at the same time?’ Andrew Howles of Smile Car Finance. On the other hand, if you can barely tolerate the car that you currently drive, then there’s no point in wasting your effort and time on it. In this case, it would benefit you more if you were to purchase another car – finance still being the best option and of course, many types of finance to look at. 

Is Your Car in Good Shape?

If the car you have is modern and isn’t experiencing mechanical issues, that should be reason enough to keep on driving it around. Obviously, reverse the situation and your car is beginning to break down frequently which in both short-term and long-term, will cost you more money than you’re saving. In which case, it would be a better idea to trade your car in for another that won’t require you to cover the expenses of the unexpected maintenance bills and such. Don’t worry though, if the finance option you currently have is working fine and has proven to benefit your financial situation, you can always use the same scheme but with a different car of your choice!

Has Your Credit Improved Since?

As you may well already know, having a better credit score will enable you to get a better deal on a new car when the time comes. Nevertheless, it also means that refinancing your current loan in search of a better interest rate is much more of a possibility. For example, if the original loan you were accepted for has a 10% interest rate, further down the line you can qualify for a 5% interest rate and this means that you will see larger savings without having the additional hassle of selecting and buying another new car – either way, finance refinancing is a fantastic scheme.

How Are the Interest Rates Looking?

It’s quite common for interest rates to fluctuate all the time, it all just depends on when you bought your car – this could mean that the rates are much lower across the board, which could mean cheaper monthly repayments for you. In this situation, whether your credit score has improved, stayed the same or worsened over time, it wouldn’t make an ounce of difference – the age of your car determines the cost of interest rates with any finance agreement on a car, so the older the car, the lower your interest rates will be.

 

Did You Receive a Competitive Rate When You Purchased?

You could have one of the best credit scores in the world and still not receive the best rates. In which case, if you got your loan at the dealership when you bought your car, the rate was determined on their individual finance department and their relationships with the banks – the list goes on and on. Regardless of the circumstances, if you feel as though you weren’t offered a highly competitive rate the first time around, then you might want to consider looking into refinancing in order to fix your situation. After all, why would you want to pay more money than necessary? Your savings could look a little healthier in the long run.

 

How is Your Financial Situation Looking?

Believe it when you are told that life is full of surprises – something positive can happen one day, and something worse the next but more importantly, in financial situations, anything can crop up out of the blue. Nevertheless, if you are confident that you can afford a better vehicle, regardless of any underlying obstacles, then by all means purchasing a new car is a good option to choose. While on the other hand, if you have experienced a loss of income or have gained a new expense, then perhaps refinancing is a much better and cost-effective option for you. There are so many different finance schemes for you to choose from, all of which can be tailored to your financial situation.