4 Reasons to Refinance Your Car Loan with Another Lender in Singapore

Most people will use it to lower their monthly payments by obtaining a lower interest rate or extending their loan term. You might save money on interest over the life of your loan when you refinance a car loan with another lender in Singapore. However, it is not always a wise financial decision, especially in the current economic climate.

4 Benefits of Refinancing Your Car Loan

Opting to refinance your car loan with another lender in Singapore lowers your interest rate and can help you save money. The procedure entails replacing your current auto loan with a new one, usually from a different lender. Your car will be collateral for your new loan, just as it did for the previous one. Here are the four benefits of refinancing your car loan.

#1 Reduced Interest

You may obtain a lower interest rate than you currently have when you refinance your car loan with another lender in Singapore. However, lenders consider if your credit has improved since you purchased your vehicle or if the market interest rates have fallen.

#2 Less Monthly Payments

The reduction of your interest rate usually translates into lower monthly payments. Moreover, a longer repayment term can help reduce your monthly payment even further. However, it may result in higher interest charges over the life of the loan, but it may be worth it.

#3 Quicker Debt Repayment

You could also opt for a shorter repayment period when you refinance your car loan with another lender in Singapore. Shorter terms are typically associated with lower interest rates and can save you more money by letting you pay off your debt faster at higher payment rates.

#4 Obtain Equity Cash

Some auto lenders provide cash-out refinance loans. It will allow you to refinance while receiving cash to cover other expenses. Financial firms often reserve this option for people with a significant amount of equity, like a heavy and light goods vehicle fleet, in Singapore.

4 Tips for Refinancing Your Car Loan

Some second hand car options in Singapore can cost more due to availability. Higher prices mean you have to pay more and for extended periods. The following are tips for refinancing your car loan.

#1 It is best to inquire with a few different lending firms.

Shop around and compare interest rates and terms from multiple lenders before sending a loan application to one or two. You can get preapproved before applying and receive a rate quote with just a soft credit inquiry. Each lender has its formula for calculating your rate. Hence, getting multiple quotes is critical if you plan to refinance your car loan with another lender in Singapore.

#2 Consider other fees.

There are car loans that have a prepayment penalty. It means that paying off your loan before the due date may cost you more than your interest rate reduction. Looking to refinance your car loan with a lender in Singapore is not a good idea if this is the case. When you refinance a loan, some lenders charge a significant origination fee.

#3 Learn how refinancing will impact your credit score.

A hard inquiry will lower your credit score by a few points each time you apply for credit. The average age of your accounts will decrease whenever you open a new loan account. Refinancing is unlikely to make much difference unless you have a long credit history. 

These factors are far less significant in determining your credit score than your payment history. Furthermore, making timely payments on your new loan after you refinance your car loan with another lender in Singapore will raise your score over time.

#4 Begin your search with a firm you know.

It is generally best to begin your search to refinance your car loan with another lender in Singapore with financial institutions you already know. Your relationship with a financial institution may make you eligible for a loyalty discount on various loan fees. Firms are more likely to approve loyal clients for refinancing if they have a good track record.

When should you consider refinancing?

There is no best time to refinance your car loan with another lender in Singapore. It is already the best chance if it saves you money. The prime rate and other factors can influence most car loan interest rates. In some cases, refinancing a car loan could be your ticket to a lower monthly payment. 

Even if market rates have not changed significantly, raising your credit score may be enough to get you a lower rate. If your credit score has improved since taking out your first loan, you may be eligible for better loan terms that reduce out-of-pocket expenses.

Moreover, second hand car dealers in Singapore can charge higher rates than banks and credit unions to make a more substantial profit. Refinance with a different lender if you obtained your initial loan through dealer-arranged financing.

What do lenders require to consider you for refinancing?

Lenders who can refinance your car loan in Singapore will assess eligibility in various ways. Check the requirements for you, your vehicle, and your current loan before refinancing. The following are the most common documents lenders require.

• A consistent source of income, a low debt-to-income ratio, and excellent credit.
• A lease agreement, mortgage statement, or a utility bill as proof of residency.
• To determine the value of your vehicle, use its make, model, year, vehicle identification number (VIN), and mileage.
• Your loan’s current balance, monthly payment, and payoff amount to see if you meet the loan’s minimum requirements.

Work with a Reputable Firm

Think One Automobile & Trading Pte Ltd provides a one-stop shop for buying, selling, and exporting cars. They can also renew insurance and road tax and arrange favourable hire purchase rates. Mr Neo Tiam Ting, a Think One founder, started the company as a single-handed operation in 1992 to grow it into a primary player in the commercial vehicle market. Approach them if you are looking for a new car for sale, from light goods vehicles to a prime mover truck, in Singapore. Visit their website to learn more about the firm and its services.