SO your monthly car payment has become too burdensome, leaving little to spend on anything else. The good news is that there are ways to get rid of that bothersome loan and secure a new one with better terms.
Remember that central bank interest rates have been trending downwards over the last year and auto loan rates have generally followed suit. So why stick to your original high interest rate loan when refinancing can give you one with a lower interest rate and/or a longer time period to pay it off.
  1/1  |
Where can you go to get refinancing? At almost any of the major financial institutions, such as National Commercial Bank (NCB).
"We can definitely help both customers and non-customers refinance their existing car loans resulting in more affordable monthly payments. Our suite of value-added automobile loan products can also be used to refinance existing car loans," said Adam Harris, NCB consumer portfolio manager, retail banking division.
Harris gave an example of an individual who borrowed $5 million from a financial institution two years ago to purchase a new 2008 motor vehicle at an interest rate of 19.75 per cent over six years -- representing a monthly repayment amount of approximately $119,040.67 at the time the loan was granted. He told Sunday Finance that such a customer, who would now have a loan balance of $4 million, could cut payments by 21 per cent monthly by refinancing with NCB today.
"The loan amount granted would be $4 million at an interest rate of 16.95 per cent over 5.5 years. This represents a new monthly repayment amount of J$93,580.71. Therefore, as a result of refinancing the loan with NCB, the customer is saving a total of $25,459.96 per month or $305,519.52 per annum," noted Harris.
At Scotiabank, persons who are currently financing their car loans at a rate higher than the 16.95 per cent can explore the possibility of refinancing that loan at the institution. However, that firm does it on a customer case by case situation, after assessing the details of the person's financial circumstances.
"Scotiabank's mission to protect our customers' financial welfare and help them become financially better off. We do offer a loan refinancing programmes as we recently invited our customers to come in and talk to us as part of our Customer Assistance Programme," said Scotiabank in a statement.
"When refinancing is done, it is done using a (borrower's) motor vehicle as security, depending on the age of the vehicle. The age of the vehicle may also allow for the possibility of a longer-term loan so that the monthly payments are reduced," added the firm.
At another commercial bank, RBTT Bank Jamaica, one can reduce the burden of monthly car payments through refinancing of their motor vehicle loan, but can also do it by accessing a home equity loan or by debt consolidation at the institution.
"A home equity loan is a consumer loan that is secured with the debt-free value (or equity) in the borrower's home. Based on the longer repayment period and attractive interest rates, borrowers may opt for Home Equity Loans, the proceeds of which can be used to liquidate the car loans," noted Anette Atkinson, RBTT Bank Jamaica corporate communications and brand manager.
She added that "a borrower can also access a debt consolidation loan to refinance a motor vehicle loan, as well as other high cost debts. Usually, the lower interest rate of the debt consolidation loan offered by RBTT results in a much lower monthly repayment for the client. A debt consolidation loan is usually an excellent method of refinancing to liquidate high cost debt."
Persons may also want to consider refinancing with a credit union, which is relatively cheaper sometimes.
At COK Sodality Co-Operative Credit Union, for instance, persons seeking to refinance loans have a few options to choose from.
"At COK Sodality our doors are always open to hear the challenges our members have with making their loan repayments. We have a dedicated team which would be able to sit with them and find a workable solution to alleviate some of the pressure they may find themselves facing," said Audia Hoo, member relations manager at COK.
She noted that refinancing a motor vehicle loan using another acceptable collateral may cut a loan repayment by as much as 50 per cent. For example, she said that if a member uses a COK Home Equity Loan to refinance his/her motor vehicle loan issued in 2009, where there was a marked increase in lending rates across all financial institutions, would allow the person to access a lower interest rate by as much as six per cent and an increased repayment term, where using a home as security -- they may access up to 15 years to repay. She added that converting a motor vehicle loan to a loan within shares or deposit would also afford the member a considerable amount of relief as cash secured loans often offer lower interest rates with more flexible payment terms.
But no worries if you don't have collateral. If a COK member does not have any other collateral to secure the loan, Hoo told Sunday Finance that he/she may ask for an extension in the repayment term, or perhaps, based on their credit history established with making their loan repayments at COK, they may be granted a reduction in the interest rate (Conditions apply in both cases).
"The extension in repayment term would spread the repayment of the existing balance over a longer time period which would allow for a reduction in the monthly obligation; coupled with a reduction in the applicable interest rate, the member would be able to make some considerable savings," remarked Hoo.
These are just some of the options for refinancing out there. Against that background, don't just sit there stressing about your hefty car payments. Get off your feet and search for a new auto loan
No comments:
Post a Comment