Could refinancing your car save you some precious pennies?
We are used to remortgaging our homes to save money by securing a lower rate of interest. Weâ€™re getting better at switching energy tariffs and suppliers to save money on our gas and electricity bills. So, is the next big thing getting a better deal on your car finance â€˜by refinancing your carâ€™?
What is car refinancing?
An auto refinance loan is a secured loan used to pay the existing balance on a current car loan. The car is used as collateral for the new refinanced loan.Â
For example, maybe you have a Personal Contract Plan (PCP) or Hire Purchase (HP) deal with a fair amount still to pay on it. Maybe you took out a deal which seemed good at the time, but youâ€™ve since realised it no longer suits your needs. Refinancing could help you find something which better suits your current circumstances.
Why finance your new car
Whatever your reason for refinancing your car loan, itâ€™s important you consider the pros and cons depending on your situation and make sure you will benefit from it.
Two of the reasons why you may consider refinancing your car:
1. To save money - refinancing could mean you get offered a lower rate of interest which could result in lower monthly payments and a saving on the total amount payable overall.
NOTE: If you take the loan over a longer period than the original deal, this could result in the total amount you pay back overall increasing so check the total amount payable before you decide if this is the right option for you.
2. To own the car - if owning your car is important to you taking out an unsecured loan with a finance company like Admiral to settle your car finance, can help you do that. You will own your car outright, whereas if you stay on a HP or PCP deal, the finance company will own the vehicle until the final payment is made. For the PCP deal youâ€™ll need to fund the final â€˜balloon paymentâ€™ at the end of the agreement, should you wish to purchase the car.
NOTE: By settling your PCP/HP deal with an unsecured personal loan, where you will own the car outright, this does mean that you will no longer have the option to hand the car back at the end of the term and that the Voluntary Termination (VT) clauses outlined within your current finance agreement will no longer be available.
Make sure you consider all borrowing options so youâ€™re certain an unsecured loan is the right choice for you. You may find it helpful to seek independent advice where necessary.
How to refinance your car with an Admiral unsecured loan
One you've decided to refinance your car, Admiral will make it easy for you to apply for a refinance car loan. Simply follow the steps below to help guide you through how to refinance your car.
- Dig out your car finance paperwork.
- From your paperwork, weâ€™ll need to know:
- The type of car finance youâ€™re on (PCP, HP or other)
- The original loan amount, start date and term c. Your current monthly payment
- If youâ€™re on a PCP deal, the guaranteed future value (GFV) of the vehicle
- The settlement figure - this is the amount youâ€™d need to pay off the car finance deal.
- Enter all of these details into our refinance calculator to see if you could make any savings on your current finance deal. Representative APR 3.1% for loans of Â£7500-15000. (Any savings outlined are subject to change as the rates offered will depend on the amount you wish to borrow and your individual circumstances).
- Apply online to see if youâ€™re eligible for an unsecured loan through Admiral.
If youâ€™re approved, you will need to read and agree to the terms and conditions of the loan by signing your loan agreement. Please ensure you read the contract pack fully to ensure you are happy the product meets your needs. The loan proceeds will be paid directly to you in order to pay off your HP/PCP agreement. Once settled youâ€™ll own your car outright.
(It is your responsibility to repay your other debt using this loan, using this loan for another purpose may leave you in financial difficulty.)