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What you need to know about paying off your Smithville car loan early

What you need to know about paying off your Smithville car loan early

A few options are available to you if you want to pay off your car loan sooner. The first step is determining whether you can prepay your car loan without incurring any penalties.

Most car loans have no penalties for paying off the loan before the agreed-upon maturity date, but you should always double-check.

If there are no prepayment penalties, you should consider increasing the amount and frequency of your payments.

This may necessitate some extreme budgeting or taking on a second job and applying the proceeds to your car loan.

Refinancing your Smithville car loan like a professional

Refinancing your car loan to a lower interest rate is another way to pay it off faster. This is a more sophisticated strategy, but if you have a high-interest car loan, it could save you a lot of money.

You must apply for a new loan with a lower interest rate to refinance a car loan. Interest rates were at historic lows, but they will begin to rise in 2022 and well into 2023.

Lenders are more cautious; you must have good credit to get the best interest rates. You should have no trouble getting a great interest rate if your credit score is 700 or higher.

The most difficult obstacle to overcome is the residual value of your vehicle. Your car is used as collateral for the loan, but its value may be less than the amount you owe on your current loan.

This is known as "negative equity or underwater," and it affects the majority of car owners. Previously, you would have had to pay the difference out of pocket to secure the loan, but that is no longer the case if you have the right assistance.

Turning to the experts for help

You will need to go through a local car dealership to refinance your Smithville car loan if you owe more on the car than it is worth.

The dealership can purchase your used car at a higher "trade-in" price and then sell you a newer car with a lower monthly payment.

Another option available at your local car dealership is to roll the negative equity into your new loan. For example, if your car is worth $7,000 and you owe $12,000, your new loan will be $12,000 with a lower interest rate.

You can only get these loans if you go through a dealership and have good credit (good credit means a credit score over 680)

It would be in your best interest (pun unintended) to contact these dealerships as soon as possible to discuss your options. You should be able to pay off your car sooner and start living life on your own terms if you reduce the amount of interest you pay.

Do not and we cannot stress this enough, do not try to refinance the car loan with online lenders.

They are not able to properly appraise your vehicle nor are they able to find the best lenders in all of Canada, only local car dealerships are able to meet that tall order.

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

Categories: Car Loan

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