Understanding Car Refinance Loans: A Comprehensive Guide

Using a car refinance loan, you can switch out your existing auto loan for a new one—ideally with better terms—by using financial tools. It entails using a fresh loan from a different lender to pay off your current auto loan. This procedure is frequently used to shorten the loan term, get a lower interest rate, or lower monthly payments.

Features and Benefits of Car Refinance Loan

  • Different Lender: For possibly better terms, move to a new lender.
  • Pay Off Sooner: You can pay off debt more quickly with shorter loan terms.
  • Shorten Loan Term: To pay off your car sooner, choose a shorter loan term.
  • Lower Payments: To cut down on your monthly payments, take out a new loan with a lower interest rate.
  • Adjustable Terms: Adjust the loan terms to more closely align with your existing financial circumstances.
  • Improved Financial Situation: You can fit your loan into your current situation by adjusting the terms.

Car Refinance loan Eligibility

For salaried individuals

  • Those who apply for loans with a minimum age requirement of 21 and a maximum age limit of 60 after the loan term
  • People who have been employed for a minimum of two years, at least one of those years with their current employer
  • Those who make at least Rs. 2,50,000 annually, taking into account the income of their spouse or co-applicant.
  • People who own a car and, if they have an outstanding loan on it, have made at least 12 EMI payments.

For Self Employed Individuals

  • Those who, at the time of application, are at least 25 years old and, after the loan tenure, are no older than 60.
  • Those who have operated their business for two years or longer.
  • Ought to make at least Rs. 2,50,000 annually
  • People who own a car and, if they have an outstanding loan on it, have made at least 12 EMI payments.

Car Refinance – Checklist to Follow While Applying for it

  • Check for Fees
  • Research Lenders
  • Review Credit Score
  • Compare Interest Rates
  • Assess Refinance Purpose
  • Check Current Loan Details
  • Calculate Potential Savings
  • Evaluate New Loan Terms
  • Gather Necessary Documents

Car Refinance Interest Rates

Bank/NBFCRate of Interest
Tata CapitalStarts from 12.99% p.a.
Punjab National BankStarts from 9.80% p.a.
Axis Bank13.55% p.a. – 15.80% p.a.
State Bank of India11.30% p.a. – 14.80% p.a.
HDFC Bank13.75% p.a. onwards (Rack Interest)

Documents Required to Apply for Car Refinance

  • PAN Card
  • Salary Slip (latest 3 months)
  • Signature Verification Proof
  • Registration Certificate of the car
  • KYC documents (Valid Photo ID Proofs)
  • Salary account statement(latest 6 months)
  • Loan track (if there is an active loan on the car)
  • Last 2 years ITR as proof of income (for self-employed individuals)

EMI Calculator for Car Refinance

One helpful tool that can assist you in estimating the monthly installments you will need to pay toward your car refinance within a certain time frame is an EMI calculator. You can better organize your finances by calculating your EMI in advance with the RU refinances EMI calculator. Moreover, the Rurefinances Car refinance calculator allows you to compare various refinance options and determine your eligibility.

FAQ of Car Refinance loan

Q1. Does the terms of my refinanced loan depend on my credit score?

A. It is true that your chances of getting a better interest rate and terms on your refinanced loan are greatly increased by having a high credit score.

Q2. How long is the waiting period to refinance a car loan?

A. It’s usually best to hold off on refinancing for 60–90 days after you purchase your car. This waiting period enables the correct title transfer into your name, which is necessary for refinancing. Furthermore, refinancing can offer the biggest benefits if your auto loan has two or more years left on it. However, consideration should be given to elements like the remaining loan balance, the age, mileage, and condition of the car.

Q3. Why would someone refinance a car loan?

A. Refinancing your car loan is primarily done to get a better interest rate than you currently have, which will lower your monthly EMI payments. Securing the best terms for your auto loan is the ultimate purpose of refinancing.

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