Once you’ve enough money to buy the car of your dreams, you might be wondering how to finance it and what your different financing options are. Here’s what you need to know about each one to get the best car loan refinance rates.
Leasing a car allows you to spread out your payments and get new wheels every few years. However, leasing doesn’t always make sense—you may be able to save more money by buying or financing a car through another method. So do some research about leasing before you dive in, and determine if it’s right for you.
Car Loans vs. Leases
Let’s say you need a new vehicle, but you don’t have enough cash on hand to purchase it. Should you go with a car loan or lease? The answer will depend on your unique financial situation. Each option has its pros and cons.
Benefits of Car Loans
- No credit checks
- No need to save up for a car purchase — get one immediately
- Up-to-date models — get the latest technology
- You can get a car without a deposit
- The interest rate is fixed, so it’s more predictable
Most types of loans require giving up some degree of control over how long you keep the car—and how much money you pay for it.
Refinancing Your Auto Loan
If you want to reduce your interest rate or reduce some of those pesky fees on an existing car loan, refinancing is an option to explore. Refinancing can also be a way to secure more money for a larger down payment on a new vehicle. According to Lantern by SoFi, ” With a good income, debt-to-income ratio (DTI), and credit score improvements, a lender may make a reasonable auto refinancing offer.” However, it’s important to know that once you refinance, you might not be able to refinance again.
Down Payment Options
The amount of money put towards a purchase is called a down payment. The higher your down payment, the lower your monthly payments will be. For instance, if you don’t make a down payment on your car, you’ll end up paying more for it over time due to interest. If you can afford it, putting 20% or more towards a new or used car purchase would be ideal for keeping monthly payments low.
Leasing vs. Buying
Leasing and financing a car go hand in hand, but they’re not one and the same. Leasing provides short-term vehicle use and is typically only an option for businesses and individuals with high credit scores. Financing lets you take out long-term loans to buy or lease cars, which can be beneficial if you don’t want the car for several years.
Your monthly car loan payment can be a big expense, especially if you’re looking to get a new vehicle every few years. If you want to see if refinancing your car loan could lower your monthly payment while still giving you access to competitive interest rates, call a Lantern by SoFi representative today for more information.