All Things You Should Know About Refinancing Car in Malaysia 2023
In year 2023 do you need an additional loan to reduce your financial payments? Are your loans depleting your cash flow? If you are looking for a solution to help you accomplish your car loan, perhaps you need to know the term refinancing car forward.
Nowadays, there are many solutions provided by several banks or financial institutions for funding your needs, particularly your car loan. This process is called refinancing a car loan, which helps you to reduce your interest rate and financial commitment.
In Malaysia, you can find out how to refinance your car loan in easy ways. However, before deciding to refinance your car loan, you need to know all things related to refinancing your car below.
What are the crucial reasons to refinance?
Everyone has their own reasons before choosing to refinance their car. The following reasons that may be considered by many people, such as the current financial condition, cash flow status, cash needs, car loan duration, etc.
• The current financial condition
People typically choose to refinance because of their current financial condition and they can not pay the loan several times. Hence, they need a new loan to pay off the remaining installment by refinancing their car to the bank or financial institutions.
• Cash flow status
People usually need to get a new loan because their cash flow status is in trouble. They can not pay for the car loan because the remaining monthly income can not cover their monthly needs.
• Cash needs
Another reason people tend to refinance is cash needs. Sometimes, they need cash to pay off loans such as a car loan, house loan, or any needs. Hence, reapplying for a new loan will help to fulfill their needs.
• Car loan duration
How long the car loan can become one of the reasons why people choose to refinance their car. Refinancing for the new car will help them to pay for the long payment period. Moreover, the cash that will be delivered is more valuable than applying for the old car.
• Late payment
The late payment or out of the schedule for paying the installment, it is also implied by the current financial condition. Hence, people tend to refinance to cope with their delayed payment. Refinancing a car will help people to reduce the interest rate and the monthly payment.
Steps to refinance car
If you are interested in refinancing your loan, these steps may help you to know what you need to do to apply for refinance.
1. Documents needed
The basic things you need to know are all the relevant required documents to apply to refinance a car.
• Personal data such as identification card and driving license.
• Income evidence such as paycheck, pay stub, and tax return.
• Car registration data such as identification number, insurance, gasoline mileage, and the grant number.
• Details of the current loan, such as the current balance of your loan, monthly payment, installment period and the interest rate of the current loan.
2. Review the credit score
Before applying for the refinancing, you need to review your credit score by checking it with Bank Negara Malaysia, Credit Counseling and Debt Management Agency or other related agencies for free. For this credit score, you will get a health score credit if you have paid your loan regularly and on time in a year, so your approval will be easily approved.
3. Create the application
To get the best offering from local banks or financial institutions, you can create many applicantions to compare the interest rates and benefits. Make sure you send your refinancing applicantion within a period of 14 days.
4. Assess the current value of the car in the market
The car devaluation generally will impact the application status. It can happen because many owners or cars do not know the current value of their car in the market that is underneath than the current balance. Hence, it can impact the possibility of the application being rejected.
To avoid rejection, you can assess the current value of the car in the market by using an online refinancing calculator. You can go forward if your current value is higher than the current loan balance.
5. Recognize the period of loan
There are two periods of loan you can recognize before applying for the loan refinancing.
• Shorter period
The shorter period refers to the loan period in a shorter time. This period of repayment is chosen to keep paying off the amount of loan, the same as the previous payment to cut off the installment or financial obligation faster.
• Longer period
The longer period is suitable for people who have a limited budget and need to reduce the installment commitment by lowering the amount of monthly payment. This longer loan period means you will be in a longer period of repayment with a high rate of interest.
6. Send the documents
Lastly, you can send all the documents and the complete application you have chosen either from a bank or a financial institution. After you send them, determine the kind of loan period you need, either the low rate of interest or a longer period with a high rate of interest.
After the applications are approved by the bank or financial institution, you can start to pay the new installment based on the new loan refinancing while the bank will pay off your past loan.
There are advantages and disadvantages to applying for loan refinancing. The advantages of refinancing are the reduction of financial payment, reduction of the interest rate and the appropriate financial payment. Meanwhile, the disadvantages of loan refinancing are the increase of your overall loan and acquiring an additional cost of liabilities. Hence, before deciding to refinance your car loan, consider all things, including the following consequences.
Type of Refinance in Malaysia