Refinance Car Loan in UAE
Car loan refinancing, also termed as car loan balance transfer or refinance car loan, is a process of switching your existing loan provider. Circumstances may arise where you feel financially stuck due to the ongoing car loan repayments. This could be usually due to high interest or instalments. ...read more
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This facility typically allows you to transfer your car loan to another lending institution, where you get better terms, interest, and other favourable options.
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Why Do I Need to Refinance Car Loan?
Now that we know the concept of car refinance, let’s understand why and when you should consider shifting your car loan.
There could be several reasons, some of which are -
- You may be seeking to pay off your loan at the earliest without incurring early payment penalties
- You got a favourable rate at the beginning but better rates are available now
- You may want to extend your loan term to reduce monthly instalments
- You may have improved your credit Score, due to which you’re qualified for better loan terms
How to Refinance My Car Loan?
Follow these simple steps to refinance car loan UAE -
Evaluate Your Existing Loan
Look into your existing loan. Know your monthly instalment amount, the months left to clear the loan, and the remaining loan amount.
Assess Your Car Value
It is important to stay updated about your car’s current value in the market. Your car’s current value may be lower than the amount you owe to the bank at present. On the contrary, your car’s current market value may be higher than what you owe to the bank.
Know the Application Process
Read the top banks’ guides on ‘How to Refinance My Car Loan’ to know the application process as it could vary as per the bank. Gather all the documents — it’s suggested to keep both originals and copies handy.
Compare Banks and Interest Rates
Now the final step includes looking for a suitable provider. Easily compare banks and their loans on Policybazaar UAE. This is a unique platform where you can compare several products altogether.
How Long Does it Take to Refinance Auto Loan?
Generally, the period of your vehicle title transfer from the previous owner to the new lender is between 60 and 90 days.
Refinance Car Loan UAE: Points to Remember
Here are a few points you must take into account before financing your auto loans -
- Be aware of the pros and cons associated with refinancing your car loan
- Know about the bank and its car loan in detail
- Compare your existing loan with the loan you are planning to opt for
- Know the costs associated with the new bank loan
- Know the value of your car quoted by the new bank — an old car’s market price can significantly affect the loan interest rate
Car Refinance: Are There Any Risks?
While refinancing of car loans can save you money, don’t forget to consider the risks involved -
- You may incur additional fees that come with refinancing your car
- Every time you seek to refinance, lenders run a hard credit inquiry. This can decrease your credit score.
- There are chances of refinance loan application rejection if you’ve borrowed more than the car’s value
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Refinance Car Loan: Avoid These Mistakes
Here are certain points you must keep in mind before refinancing your car loan in the UAE:
- A prepayment penalty may apply to your refinance car loan. Some banking institutions charge an extra amount for making early loan settlements. Thus, the terms and conditions of the existing loan should be evaluated beforehand.
- Lenders may deny your request for car refinancing if you owe the bank more than the car value.
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