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What is a Good Reason to Refinance a Car?

August 4, 2022 By Susan Paige Leave a Comment

What is Auto-Refinancing?

 

Auto-refinancing is said to hold when you change your decision about continuing a contract with your initial car loan financier and have chosen to initiate a new deal with another lender for reasons that will benefit you in the long run. 

 

Several reasons could prompt you to take such a decision which may include lowering your monthly interest payments, reducing the overall loan amount/balance, or extending the contract period for flexibility.

 

Thinking about Refinancing your Car?

 

Yes? Then, you are on the right page! But let’s first get acquainted with what you may fail to understand or lose from auto-refinancing before dwelling on the benefit which actually brought you here. 

 

Did you know auto-refinancing could be detrimental to your credit score? The extent to which it can affect your score could be so bad that recovery becomes impossible. That is likely to happen if you do not wait long enough to regain your score status before choosing to refinance your auto.

 

The Cons of Refinancing your Car

 

It is important to be aware of the consequences that may arise from taking the path of auto-refinancing. Therefore, it is a huge benefit to consider the following drawbacks involved in auto-refinancing. They include:

 

  1. Over-extension of Loan Repayment Period:

The only reason why most people boycott the idea of auto refinance is the prolonged lifespan of the new contract. Any other con is a result of this over-extension. So, weighing the benefits of the juicy package you have discovered would definitely supersede its drawbacks.

 

This may sound strange but this drawback is even a huge advantage in disguise if you look at it critically. Imagine how convenient it would be to have the opportunity to repay a loan to suit your monthly income and credit worthiness. Then it should be a relief to know that you can take as long as it will favor you to settle your debts.

 

  1. Age of Vehicle:

You should be aware now that old cars usually attract higher interest rates than new ones. Cars between the age range of 5 to 12 years are considered too old to fetch enough profit for the company in a situation of swapping for a different choice or replacement following an accident according to insurance policies. Therefore, be wise to check with the new lender before you refinance your auto to avoid any misunderstanding or regrets after signing the new contract.

 

Inform the new dealership of your vehicle age, model and preferred repayment terms before you approve any scheduled meeting or append your signature on supporting documentation. That will prevent any breach on your part when you realize that they are charging you extra above the rate you initially presumed was their standard charges for regular vehicles below 5 years old.

 

Now,

 

What is a Good Reason to Refinance a Car?

 

It basically points towards enjoying “Flexible Payment Conditions/Terms” which can be discussed in the aspects highlighted below:

  • Reduced Interest Rate:

Having a very low interest rate to offset installmentally over the course of any contract is worth giving a try when compared with an existing contract term involving a higher rate. This is the first good reason why you shouldn’t shrug off the idea of refinancing your car. 

 

A lot of car dealers gain enormous profit from the accumulated interests paid by their customers over time to boost sales and business transactions for the overall success of the company. Therefore, no lender would withhold from rendering their services to any client willing to strike a fair deal with them.

 

Provided the deal will favor both parties, you as the client must be ready to accept the moment you hear that the interest rate requested by the lender is within your financial capacity. Otherwise, it would do you greater benefit to remain with the present financier or continue with your previous contract conditions at the same company.

 

With a lower interest rate, consider yourself a business mogul/guru. You are on top of the game. Loan repayment becomes much more flexible for you because of your ability to make the best choice. Regarding this factor about low interest rate, you would need to first gather substantial information about all car dealers/lenders within your geographical location. Proximity to your residence matters because if you fail to weigh the cost of transporting the vehicle to your destination, you are as good as a reckless spender.

  • High Drop in Monthly Payments:

This is another benefit also woven around the major reason for embarking on the “auto-refinance journey”: Flexible Payment Conditions/Terms. Aside from enjoying a favorably low interest rate, it would profit you to also enjoy offsetting your loan in meager installments. Although the contract period may seem longer than it was with the previous arrangement, it is best to opt for a less burdensome repayment package.

 

You may be thinking about how the total amount paid in the long run may also be higher than if you were to pay within a shorter period. Do not be perturbed because what matters is how you are able to manage your monthly income/finances. Your monthly budget and expenses must balance to avoid a financial strain on your savings and credit score. 

 

Is it Worth It?

Absolutely! Because the benefits outweigh the drawbacks. Consider how much good it will do to your finances without you breaking the bank to just to service a car loan. You are able to meet your personal needs while being mobile without wasting resources excessively on car hire like uber. Infact, the funds that will go on commuting commercially or moving around via public means daily is enough to purchase an SUV outrightly.

 

Remember we take loans to give us the freedom to pay later and also enjoy the item/product even before we complete the payment. Hence, making an outright payment even if you have the ability to do so is not financially advisable nor a wise step to take.

 

Do it Now!

Why procrastinate when you can save yourself from financial stress? Take that bold decision and refinance your auto NOW!!!

Filed Under: Cars

The Irrationality of Seeking the Lowest Gas Price

July 4, 2022 By MelissaB Leave a Comment

Seeking the Lowest Gas Prices

This week, I drove through the Costco parking lot, and I noticed that the usual entrance to the Costco gas station was blocked off. Instead, gas station traffic was diverted to the area by the entrance of Costco so a longer line could form and not block other parking lot traffic. I followed the line for gas and discovered it was at least 10 cars long. What?! What is this irrationality of seeking the lowest gas price? I am a Costco member, and yes, gas there can be up to 25 to 30 cents a gallon cheaper, but I would never wait in such a long line for gas.

Why do Americans obsessively attempt, at any cost, to pay the lowest gas price? Do they not know that their efforts cost them precious time and yes, even money?

One Woman’s Pursuit of the Lowest Gas Prices

I have a relative I will call Judy, who is a low gas price chaser. She will drive 10 miles or more out of her way to save a few pennies per gallon on the price of gas. She has a 10-gallon tank. If she pays $5.04 at her local gas station, filling her empty tank will cost $50.40.

If she cruises to a town 10 miles away, she might pay $4.98 per gallon, meaning a fill-up will cost $49.80. She saved .60 cents, but did she? She also wasted gas to get to the lower-priced station and took 20 to 30 minutes of her time to do so.

Why We Don’t Seek the Lowest Gas Price

I’m frugal in general. My husband and I only take our family out to eat about five times a year. We drive old vehicles. My Toyota Sienna is a 2004 and has 231,000 miles on it. My husband’s car is a 2013 and has 105,000 miles on it. We live in a modest neighborhood, and when we bought our house, we bought one that was on the lower end of what we could afford.

We like to save money, so you might be surprised to learn that I don’t play the lowest-gas-price game. It’s not worth it to me.

My minivan has a 20-gallon tank, and our nearest gas station sells gas for $4.86 a gallon. To fill up my minivan costs a whopping $97.20. Ouch! Gas at our nearest Costco is $4.55 a gallon. Filling up there would cost $91, so I would save $6.20. However, I do not want to wait in line for 30 to 45 minutes to save six bucks.

Seeking the Lowest Gas Prices

Instead, I choose to limit my driving while prices are so high. We stay home a lot more, and when we drive, we combine errands, so we don’t use as much gas. Right now, I’m filling up every two weeks.

Final Thoughts

Americans are obsessed with seeking the lowest gas price, only to save at most a few bucks, or, at worst, a few cents. To do so, they have to spend money and precious time. Rather than chasing the lowest gas price, a more lucrative option may be to find other frugal ways to save money that more significantly impacts their bottom line.

Read More

Why Buying a Toyota Sienna Was One of Our Best Decisions

Don’t Make the Cost of Gas Your Scapegoat

Is a Costco Membership Worth It When Living Alone?

MelissaB
MelissaB

Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.

www.momsplans.com/

Filed Under: budget, Cars, Frugality, Saving Tagged With: frugal, Gas, money mistakes

Our Experience Bypassing Auto Insurance

April 4, 2022 By MelissaB Leave a Comment

Bypassing Auto Insurance

A few years ago, my husband and I decided to travel with our then three-year-old to visit my alma mater. We were driving around, seeing the sites when we were rear-ended. The driver, a man in his thirties like us, was apologetic and gave us his license, name, and number. And then he said that he wanted to pay for the damages himself, bypassing auto insurance.

Our Experience Bypassing Auto Insurance

I don’t know the details of why this man wanted to bypass auto insurance. I assumed he already had some claims on his insurance and didn’t want to add more. Not only would that raise the price of his insurance, but if he had several claims on his insurance in a short time, his insurance company might drop his coverage.

My husband and I lived five hours from my alma mater, so all communication was done via phone.

Getting an Estimate

I went to a local repair shop and got an estimate for the damage. The total came to $1,462. I got a copy of the receipt and sent it to the man who hit us.

He didn’t ask for a second opinion. He accepted the quote and promptly sent me a check. However, when I received the payment, he had transversed his numbers and sent us $1,642, $180 more than the estimate.

I notified him about the overpayment, but he didn’t want to hassle with anything. He told me to keep the extra money. At this point, I think he just wanted to get the repair done.

We Were Lucky

Looking back, the man who rear-ended us was lucky because my husband and I are honest. I knew that the man was trusting us, so I went to a shop we had used for repairs before and that I trusted. I didn’t try to milk the man for more money.

We were lucky because the man who hit us was motivated to keep this accident off his insurance record and get the process over and done with. He paid us promptly.

Would I Do It Again?

Bypassing Auto Insurance

Would I bypass auto insurance again? It depends. I recognize that I could have had an issue with the man not paying, but I didn’t. He was honest.

Still, when you bypass auto insurance, you take a risk. If I just had a minor fender bender, I may take that risk again. However, I would write down the other driver’s auto insurance company and policy number, so I would have recourse if he failed to pay.

If the accident was more than a fender bender, no, I would not bypass auto insurance. The repair cost would likely be higher than a thousand dollars, and I wouldn’t want to risk losing that much money. Also, a more significant accident would require calling the police. Then an insurance claim would need to be filed.

Have you ever bypassed auto insurance? If so, what was your experience?

Read More

In a Car Accident? Should You Pay Out of Pocket for Repairs?

Does Your Car Insurance Pay for These Items?

5 Strategies to Buy a Used Car Without Being Scammed

MelissaB
MelissaB

Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.

www.momsplans.com/

Filed Under: Cars, Insurance Tagged With: auto insurance, car accident

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