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 many financial institutions are always ready to offer car loans to those who need them. However, the car loan application process can be challenging, especially if you do 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. You must research well to avoid being misled by those who know little about things like refinancing an upside-down car loan.
Below are five 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 when refinancing a car is to settle for a loan too fast. It doesn’t matter how sweet the deal appears; you must explore various options. But just in case you settle for a car loan and find out you were tricked, you still choose the auto refinancing route. Don’t live regretting a wrong 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 significant misconception about car loans. Sometimes you might get into a loan you didn’t intend to and wish to change things. Fortunately, you can use auto refinancing to get out of a bad loan. The good thing about car refinancing is that it gives you a second chance to get lower interest rates and alter the loan’s duration and terms.
3. One cannot get a loan for used cars
Another common misconception is that you cannot access a used car loan. 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 to do is agree with them on the loan terms and repayment plan.
4. You must provide a substantial 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. Some lenders ask what you can afford as a down payment and let you pay the rest gradually.
5. Auto loans with more extended periods save you money
This is not true at all. If anything, you might end up paying a lot more if the loan’s duration is extended. If you can 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 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, being wary of the many misconceptions about auto refinancing would be best.