What is car refinancing?
- A new loan to pay off an existing loan
- Can reduce your monthly payments
- Can Help You Deal With Emergency Situations
Refinancing a car loan is one of the most useful products one can use. Whether it is to purchase a car or even to get you out of a difficult financial situation. If you are not familiar with what it is, then continue reading because car refinancing can definitely be helpful for you.
A New Loan To Pay Off An Existing Loan
In a nutshell, car refinancing is a new loan you will undertake in place of an existing car loan. However, the catch here is that your vehicle will be used as collateral for the loan. This means that if you fail to pay for the new loan (otherwise known as defaulting) then your car will be repossessed by the lender to recoup the loss.
In terms of the refinanced loan, it is a new agreement or contract between you and the lender who refinanced your car. This means there will be new and better terms that are agreed upon such as the interest rate, monthly payment amount, and duration of the loan.
Can Reduce Your Car’s Monthly Payments
The reason why car refinancing is useful is that it almost always results in a reduction in monthly car payments. This is due to the terms of your new deal, specifically the loan duration and interest rate. Usually, the new loan will have a much lower interest rate, but you are going to be paying for a longer duration.
For example, you buy a car at a given price. You took out a loan for that amount to pay for the car with an annual interest of 6% to be paid over the course of 48 months (4 years). However, after 12 months you realize that you can no longer afford the monthly car payments. This is when you can apply for car refinancing.
The new lender will pay off the remaining balance you have on your first loan and will offer you a new loan. The new loan will be worth that amount but with a lower annual interest rate of 3% to be paid over the course of another 48 months. Do note that by refinancing your car in this way, you will be paying for your car for 60 months in total. This is because you already paid for 12 months, but took up another loan for another 48 months.
But what does this all mean for your monthly payments? Without getting into heavy calculations — because you’re paying for the same amount you originally owed, but for a longer period. This means that your monthly car payments will decrease substantially. Also, your new interest rate of 3% is sufficiently below your old interest rate. In the end, you will cumulatively pay fewer interest charges than if you had not refinanced.
Can Help You Deal With Emergency Situations
Given all the aforementioned details regarding car refinancing, it really is made to help people adapt to sudden adverse changes in their life. For example, you may have gotten an auto loan so that you can have a car to use for traveling to and from work. But then you unexpectedly lose that job before you are able to pay it off. This can leave you in a financially vulnerable position.
Refinancing your car loan can be a great way for you to solve that problem. By replacing your car loan with a new and more affordable one, you are able to buy yourself some more time and manage your finances better — potentially saving you from a miserable situation.
Put simply, this type of loan is a viable option for people who are met with emergency situations. This includes sudden changes in their life related to income and financial management.
Introducing Asialink’s Car Refinancing Option
If you are looking to get refinancing for your car, then Asialink Finance Corporation can be your best bet. Enjoy ideal loan terms in the easiest way possible. You only need to provide copies of your official receipt and your certificate of registration as collateral. You also need to provide documented proof of income and proof of TIN to avail of a loan. You can loan up to 80% of the fair market value of your vehicle at as low as 1.25% interest rate per month.
Not only is the application process easy, but paying is arguably even more accessible. This is all thanks to the many commercial establishments that also function as payment centers in partnership with Asialink Finance Corporation.
Here’s a list of payment centers you can go to:
- Cebuana Lhullier
- Bayad Center nationwide
- Union Bank
Knowing how refinancing a car loan can help you is important because emergencies can happen at any given time. If they do happen, you will be forced to redirect your finances from your car loan to address the situation. Car refinancing can be one of the methods you employ to manage your money better.
Apply for Asialink Finance Corporation’s car refinancing loan by clicking here.