This time last year I was here in looking for Florida RV financing options so that I could refinance the loan which I took out on my RV in order to give us a little bit of extra cash for the new year. In the end we didn’t complete the refinancing until February because I realized that there was far more to it than simply finding a great provider and then hitting the button, much more in fact. As a result of this I thought that I would talk a little about what you need to consider if you are looking at refinancing a loan for an RV, or any other vehicle for that matter.
The value of the car is going to be crucial to whether or not you can refinance and how much you can get. For example if you owe more on your car than the vehicle is actually worth, this is referred to as being underwater and it becomes much riskier for a finance company to loan you money. In the event that they do loan you money in this situation you will have huge interest rates and large payments to neutralize the risk.
Wen you refinance a vehicle you are essentially taking out a loan that is bigger than what you owe on the vehicle, paying off the original loan and then you will have the excess in your pocket. What many people fail to understand is that there are often penalties on loans if you pay the amount off early and this is something which you need to factor in to your calculations. For example if you owe $14,500 on your vehicle and it has a $1,000 early repayment penalty, you should calculate your loan repayments as though you are in fact borrowing $15,500, which will give you a better idea of your numbers.
Another aspect which you should most definitely check out is whether your credit score has changed since you last took out the loan. It may well be that you have either increased or decreased your credit score and that will have a big impact on both your ability to borrow and the amount that you are looking to borrow. A more positive credit score will mean that you can get a far better interest rate than you currently have and you may find that you can save money in refinancing.
Refinancing can certainly help if you are in need of some flexibility each month and if this is the case then you can try to extend the term of your car loan in order to lower monthly payments. Alternatively you could look to refinance for a lower rate but still continue to pay the same amount each month which will help you to get the loan paid off quicker, thus saving you money in the long run.