As we’ve previously discussed, refinancing your car loan can be a great option for those who need flexibility to navigate certain financial circumstances. Sometimes these events may be in your favour and you’d like to arrange for earlier repayment of the loan, or a lower rate to decrease your repayments.
In other instances, it may be because you cannot meet your obligations and need to extend or defer the term or balloon payment associated with the loan. So with its place as a valuable financial tool, the question then extends to whether you should refinance your car loan through the same lender?
Why should I refinance with my current lender?
While the obvious consideration is that competition provides a good point of comparison to negotiate a better deal, choosing to stay with your current financier can offer certain benefits. These include:
- Less hassle and inconvenience – it will take less time and far less administrative effort to retain and refinance your car loan with your existing provider, especially as all your details are on file already
- You still have scope to negotiate – if you have proven yourself to be a reliable and trusted borrower, you can approach the financier to improve the terms of the loan as it is. Should you go externally, you can still use this quote with your current lender to potentially negotiate yourself a better interest rate and lower repayments
- Consolidated financial position – if you prefer having all your financial accounts consolidated with say, the same bank, you have more flexibility and access to move funds around at will. For example, if the finance has been drawn against home equity and consolidated into the one loan with your house, this will become easier to manage
- An understanding of service levels – as the saying goes, sometimes the grass seems greener, but until you switch over to a new financier, you don’t entirely know what sort of service levels you are signing up for, nor how they will compare with your existing lender
- Exit fees – keep in mind that switching financiers could involve fees when you exit the current loan, and on the contrary, there is no guarantee another lender will cover these, nor forgo establishment fees to set up the new loan with them. Make sure you ask!
We all know that there can be significant benefits to switching lenders, as your current loan might not be doing you justice and costing you more in the long run. It might not even be apparent to you just how your current deal stacks up unless you go externally to another financier to enquire about their options.
The above points however, serve as a contrarian viewpoint for those who don’t necessarily want to go through the hassle of finding a new financier, drawn particularly by the allure of lower interest rates.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.