Car loans are a great way of owning a vehicle. Many people dream of buying cars but the problem is that they can’t get enough cash to get exactly what they want. The good news is that there are many financial institutions that are always ready to offer car loans for those who need them. However, the car loan application process can be challenging, especially if you are doing it for the first time.
There are also a lot of misconceptions about car loans. Some people don’t understand the difference between a car loan and any other loan such as a mortgage or business loan. It is important to do your research well to avoid being misled or by those who don’t know much about things such as refinancing an upside down car loan.
Below are 5 misconceptions about refinancing a car:
1. You will never get a better deal than the first one
One of the main mistakes that many people make is to when it comes to refinancing a car is to settle for a loan too fast. It doesn’t matter how sweet the deal appears; you need to explore various options available. But just in case you settle for a car loan and find out you were tricked; you still choose to go the auto refinancing route. Don’t live regretting a bad decision you made because of a lack of proper advice.
2. Once you get a loan, you can’t get out of it
This is also a major misconception about car loans. Sometimes you might get into a loan that you didn’t intend to and wish to change things. Fortunately, you can take advantage of auto refinancing to get out of a bad loan deal. The good thing about car refinancing is that it gives you a second chance to get lower interest rates as well as alter the duration and terms of the loan.
3. One cannot get a loan for used cars
Another common misconception is that you cannot access a loan to buy a used car. This is not true because there are many lenders and dealerships that are always willing and ready to finance the purchase of used cars. All you need is to agree with them on the terms of the loan and your repayment plan.
4. You must provide a huge down payment
Although most banks and lenders require a certain percentage as a down payment, it is not as high as many people tend to believe. In fact, some lenders ask what you can afford to pay as a down payment and let you pay the rest gradually.
5. Auto loans with longer periods save you money
This is not true at all. If anything, you might end up paying a lot more if the duration of the loan is longer. If you are able to repay the loan within a short period, then do it to avoid accumulating interest.
According to the experts at Lantern by SoFi, “First of all, know that if you have bad credit, you’re more susceptible to this happening. Because you may not be able to qualify for a low-interest auto loan through a bank, you may only be able to get one directly from the dealer. That loan will, more than likely, have higher interest.” In general, car loans can help you buy the vehicle that you have always dreamed of. However, you should be wary of the many misconceptions about auto refinancing.