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How to save money refinancing your car loan in Niagara Falls

How to save money refinancing your car loan in Niagara Falls

We have been wanting to take advantage of the low-interest rate auto loans that are currently available are in the right spot. Our Niagara Falls auto loans team are going to take a closer look at loan refinancing and how to take advantage of this opportunity.

Understanding negative equity

We need to cover the concept of negative equity because it can impact your ability to refinance your car loan at competitive rates.

You may have heard that cars lose their value the moment you drive them off the dealership lot, the technical term for this is “depreciation”.

Once your car is classified as “used” the fair market value of it is calculated by taking the original value of the car and subtracting the current fair market value, the difference is either a profit or in most cases a loss for you.

When you bought the car, the lender gave you the full amount of the car say $30,000 but if the car is now worth $20,000 and you still owe $25,000 then you would have $5,000 in negative equity.

It simply means you owe more than what the car is currently worth.

Short supply of used cars available in the market

A saving grace is there is a chronic shortage of used cars available in the country and even around the world. This shortage has pushed up the price of used cars.

Determining the fair market value of your car is one of the most challenging tasks to do on your own. There are numerous websites that each give their opinion of what cars are currently worth. These websites can give you some insight but the only legitimate way to find out what your car is worth is to get an appraisal from a reputable local dealership.

The dealership will give you a proposal in writing that will have two prices, one that is strictly a cash offer. You need to keep in mind that you will not get 100% of the value of your car with the cash offer.

The dealership will need to resell the car for a profit so they need some margin.

The other number in the quote is the trade-in value of the car and that can be very competitive. Since you are going to be purchasing a new car, the dealership will be able to resell your trade-in car.

Some dealerships may be able to give you the full trade-in value and extra to cover any negative equity you may have. These deals are becoming more popular as Canadians opt to refinance their auto loans.

To enjoy the benefits of these low-interest rates, you will need to have decent credit. When was the last time you checked your credit score, if it has been a while since you last checked then you should review it now?

Even if your credit score is far from perfect, the local dealership will be able to help you get a car loan by showing you the steps needed to raise your credit score and keep it there.

When you’re ready for a car lease or loan, get in touch with the Niagara Falls auto loan experts at Northway Ford for great deals on auto finance.

Categories: Car Loan

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