Anyone who has taken out a car loan, especially in periods of high interest rates, wonders if car loan repayment can save money and if this is so easy. With a bit of thinking and taking the right steps, you can save a lot of money and benefit from affordable financing.
Most loans allow for special repayments
In addition to the pure interest argument, more and more lenders are also using additional services and flexibility far beyond the usual scope as a selling point for a loan. The borrower should best look in his loan agreement and look for the special repayments section.
There is then the appropriate regulation, for example, with a “special repayment at any time” or the ability to make twice a year to reduce the outstanding loan amount by repayment. Whether car loan debt restructuring makes sense depends entirely on the respective conditions and also on the creditworthiness of the borrower.
The new loan will be cheaper if the credit rating improves
Sometimes, for example, new entrants or customers with not yet fully restored creditworthiness conclude a car loan on comparatively expensive terms. Since the interest rate also depends on the risk assessment by the lender, since the original borrowing several months have already gone into the country: The specified employment exists already a few months longer and is therefore used as a safer and more stable.
In addition, the loan amount has already been reduced by the successful payment of the first loan installments, thus reducing the risk for the borrower. The existence of a regularly serviced loan also shows that the debtor bank is not dealing with a completely new borrower.
Car loan repayment also gives the “new” bank a good opportunity to meet a new customer and to be able to enter into a further business relationship with him later. Therefore, the likelihood is high that the interest on the new loan will be much cheaper.
Please take care when applying for credit
The car loan debt restructuring works on good terms but only if the borrower enters the appropriate information correctly and completely. An essential criterion for the interest rate demanded by the lender, however, is also the total outstanding loan amount.
Therefore, in all cases, the correct statement “repay loan” or “repay loan and save interest” should be made on the loan application. Thus, each processor knows that it is in fact not a new risk, but only a cost reduction or search for a new contractor in an unsold loan.
Further advantages in the car loan
In addition to saving interest, the borrower can in many cases even realize other advantages and cost savings: If his current loan is linked to a commitment to take out comprehensive insurance, then the new loan does not necessarily have to contain the same clause.
The same applies to a residual debt insurance: If you do not need them because of the lower risk and the lower amount, you can save a lot of money and spend it elsewhere. In many cases, therefore, the cost savings go beyond the mere realization of an interest difference.