What is Car Refinancing?

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You've probably heard of mortgage refinancing, but did you know that you can refinance your car as well?

After paying off your car loan for a while, you might face unexpected financial difficulties. Refinancing is an option that allows you to continue making payments and keep using your car without the risk of repossession.

What is a car refinancing?

Car refinancing is the process of taking out a new loan to pay off the existing one. The benefits of refinancing include:

• You might have extra funds available to improve your financial liquidity.
• You can extend the repayment period.
• Your monthly payments will decrease.
• You may get a lower interest rate.

*Conditions are subject to the terms set by each financial institution.

Things to know before refinancing:

• Extending the repayment period could impact the borrower's credit status.
• There may be additional costs associated with refinancing, such as loan penalties, interest penalties, and other fees.

Steps and documents required for car refinancing

• Prepare the necessary documents:
  • ID card
  • House registration
  • Bank statement copies
  • Payslips and income verification documents
  • Other documents as required by each financial institution
• Contact the new financial institution to inquire about the procedures to ensure that everything is done correctly, quickly, and for faster approval.
• Wait for approval, as the processing time may vary between financial institutions.
• Contact the previous financial institution to close the account or settle the old debt.
• Submit the car registration book to the new financial institution after closing the account with the previous one.
• If there's any remaining balance, you can use it as you wish.

When can you apply for refinancing?

Not everyone is eligible for refinancing. You need to have paid off more than 50% of the total loan amount. However, it's recommended to consult with the financial institution for specific guidelines.

Costs associated with refinancing:

• Loan Fees: Typically, financial institutions deduct these fees from the loan amount directly, so you don't have to pay them separately.
• Collateral Appraisal Fees: Whether these fees apply depends on the terms of each financial institution.
• Loan Closure Fees with the Previous Financial Institution: Generally, the new financial institution covers these costs, including them in the total loan amount.

But if you're unable to keep up with the car payments or are worried that refinancing might not be approved, you can contact Motorist . We can help you sell your car quickly and at a good price, with free home viewing!

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