Life happens and circumstances change, which makes many buyers consider refinancing. Whether you want more affordable payments or to take advantage of your improved credit, refinancing can help. Our Mercedes-Benz financing team at Mercedes-Benz of Lynnwood is illustrating how it works.
The Refinancing Process
Refinancing a loan is similar to initially applying for one. We’ll need to collect information about your employment, income, and expenses, as well as check your credit. We give that info, and info about your vehicle, to our network of lenders to see if you’re eligible for a new loan.
When it Works
A few key things must fall into place for refinancing to be beneficial. You need a good credit score to secure a lower interest rate, which is what helps you renew your loan to reduce your term or payments. It helps to have positive equity, because lenders are less likely to offer a loan otherwise. Also, it’s a smart move to explore when national interest rates are cut.
When You Shouldn’t Refinance
If your credit has worsened, you may end up paying more for your car, which doesn’t make sense financially. A high-mileage vehicle, or one with negative equity, can be risky to lenders. If they offer you a loan, it could come with a higher interest rate.
Other Options
To avoid signing a costly loan, or being stuck in a car you can’t afford, it may be time to part ways. By trading in your vehicle, you can start over fresh with a new vehicle, which may get better terms. You’ll also have the advantage of adding positive equity to your new loan.
Refinance Your Auto Loan in Lynnwood, WA
Don’t be discouraged if your auto loan no longer works for you. Whether you’re ready to refinance or trade in your vehicle, we’re here for you. Visit Mercedes-Benz of Lynnwood to get started today!
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