Did you know that it is possible to get car loan refinancing in Singapore and enjoy lower interest rates? Well, it might actually be simpler than you think, and we will tell you all about it. In this post, we will take a deeper look at car loan refinancing to demonstrate the main benefits and how you should go about it.
Car Loan Refinancing in Singapore: Is It A Good Idea?
If you are still undecided about car loan refinancing in Singapore, here are the prime benefits to anticipate.
There is an opportunity to reduce the payments: You might be able to enjoy lower interest rates with car financing. However, make sure to carefully compare the current and targeted rates to make an informed decision.
Refinancing can help to make loan repayments more manageable: If the current monthly payment is very high because you applied when the credit score was poor, but it has improved significantly, it is possible to pull that down. Although not recommended, you might even be able to lower the monthly payment by taking more years (longer loan term) for the new loan.
The perfect opportunity to shift to a better lender: Lenders in Singapore are not equal. For example, there are some who offer discounts, excellent account management, better customer service, and other add-ons, especially if you have a certificate of eligibility (COE). If you can identify a better lender, it might be possible to shift there and enjoy his services. See; why stick with a bank or financial institution you do not like for years when there is an opportunity to shift to the best?
Refinancing makes it possible to convert your car’s LTA classification to drive for Grab. For example, if the vehicle was bought for personal purposes using a car loan, its LTA classification would be P10 or P11. To drive for Grab, the law requires that you convert to Z10 or Z11. However, this will not be possible if the car has an outstanding loan. If you opt to refinance, the new lender can help with the conversion.
How Does Car Loan Refinancing Work?
Car loan refinancing is the process of taking another loan to clear the old vehicle loan and shift to new terms and conditions. In most cases, the new loan is taken from a different lender. Most people in Singapore prefer car loan refinancing if they had borrowed the original loan when the credit score was not very good but has now improved and they can qualify for lower interest rates. If you do it correctly, especially after the credit score has significantly improved, auto loan refinancing in Singapore will lower the interest rates, offer easier repayment options, and make it possible to clear the total loan amount faster.
Things to Check When Refinancing Your Car Loan
For most Singaporeans, the primary targets when considering car loan refinancing in Singapore is lower interest rate. However, you also need to check the following details when thinking of auto refinancing, and compare them with the current loan and other vehicle refinancing options:
The processing fees involved: Even when the new loan's interest rate is low, additional charges such as processing fees can make the loan expensive.
Maximum loan amount: If you look at different car loan refinancing options in Singapore, they come with varying maximum amounts that you can borrow. If you have a specific figure in your mind, check whether the amount falls within the allowed limits.
A feature of interest: If you want to be making additional payments, perhaps to clear the loan faster, you might be interested in a refinancing deal that does not penalise early repayment. Another impressive feature you might want is an insurance product bundle. So, check the vehicle loan option that offers these features and even talk to the lender for confirmation.
Mistakes to Avoid When Considering Car Loan Refinancing in Singapore
If you want to enjoy the benefits of car loan refinancing in Singapore we have highlighted in this post, it is important to avoid the following mistakes.
Extending the Loan Term
Although selecting a longer loan term when refinancing a car loan in Singapore might help to pull down the monthly payment, you are likely to pay a higher amount by the end of the loan term. Let’s take an example here. If the original car loan was $65,000 and had a 3.99% interest and you aim to refinance the remaining $45,000 at 1.99% for four years, the effect is that you are going to save $4,502. If you push the repayment to seven years, you will only be able to save $3,134.
Waiting for Too Long to Make Application for Auto Refinancing
When targeting lower interest rates or other favourable conditions through the best car loan refinancing in Singapore, now might be the best time to apply. If you have already established the current payment is high, every additional payment at a higher than necessary rate means a waste of money.
Even if the loan is new or has already been refinanced again in the past, do not hesitate to apply for refinancing it if there is an opportunity to pull down the interest rates. Why pay more when you can do with less and make some savings through refinancing?
Failing to Understand the Situation of the Current Loan
If you do not understand the current situation of your loan, jumping into refinancing might make it even more expensive. So, start with an assessment before you can apply to refinance the current loan.
To understand the state of the current loan, you need to dig deeper into the current loan agreement and look for the best refinancing opportunities. So, if you cannot track the loan agreement for your car, it will be a good idea to start by getting a new copy from the lender. Luckily, this is simple because it only requires you to reach the lender’s customer desk for assistance with a new copy. Once you have a copy, go ahead and compare different refinancing options, interest rates, and months of repayment, among other terms. Consider asking and getting answers to the following questions during the assessment:
Will the refinance loan pull down the monthly payment?
Will the refinance deal include insurance for my cars?
Will auto refinancing cut down repayment by a number of months?
How does the current interest and loan term compare with the refinance loan?
Is the lender I am considering a good option for refinancing cars?
Apply for a Personal Loan to Finance Your Car in Singapore, through Lendela
When you make the decision to buy a car in Singapore, selecting the preferred lender is never easy. This is because of the long list of lenders offering loans at different rates plus the risk of falling into the hands of unlicensed financial institutions. Therefore, you should consider using a decent lender comparison site, such as Lendela, to pick the loan with the best interest rate.
With Lendela, you are sure of avoiding unlicensed lenders because we only work with banks and legit lenders. However, the most notable benefit of using Lendela is that we help to simplify the process of financing your car purchase even when your credit score is not-so-good. If you opt to submit the application alone, it can be lengthy and involve a lot of paperwork. However, the entire application process can be completed in only a few minutes by using Lendela. Here are the main steps for personal loan car financing in Singapore, using Lendela.
Visit Lendela’s website to submit a short application. This takes only a very short moment.
The application is sent to different lenders, such as banks and online financial institutions in Singapore, that are ready to serve borrowers of different profiles.
The lenders send back pre-approved offers for you to review.
Compare the offers and select the one with the best terms and conditions.
Lendela helps you book an appointment to sign the agreement with the lender.
Sign the agreement in the lender’s office to start enjoying your new loan. Then, always repay the loan as agreed with the lender.
Car refinancing in Singapore is an excellent thing because it provides some relief from high-interest rates and can help one to manage debt more effectively. As we have demonstrated in this post, you should compare different lenders carefully to optimise the benefits of car loan refinancing. Therefore, make sure to use Lendela to find the best unsecured car financing options.