You have been thinking about refinancing your vehicle for a while now, but you are not sure if it’s the right thing for you. Your credit is awesome, much better than when you bought the car.
There are many dealers and banks that are more than willing to sell a car with rates around 25% and some people will take that because they need a car. But you shouldn’t and there is a way to fix it.
In the best situation, you have cleaned up your credit within a few years of buying the car new. The newer it is the better. Extended warranty refinance is a great option in this case, but maybe you’re unsure of what happens to the other things you purchased when you got your car.
What about the extended warranty you were sold and the GAP insurance? You might feel now as if you were duped into buying those things and don’t want to lost your money on them. It was an investment just like your car right?
There is good news and there is bad news. The good news is that your warranty, factory or extended, stay with the car no matter the status of your loan (if it’s the original or a refinanced loan). The warranty is on the car, not on the loan, so it stays with the car as long as you own it (maybe longer!).
The GAP insurance however will be canceled and any good loan officer helping you refinance will explain those options thoroughly. The GAP insurance was on the loan you took, not the car, so that goes with your old loan if you refinance. Don’t worry; it was still a good investment and one that you should make again.
With your warranty, the coast is clear. Do be aware though that if you ever get in an accident, that same warranty could be in jeopardy. Check out this explanation to learn more.
How about if you didn’t get the extended service contract but want one now that you are in a better place financially? Even though they are not usually pricey, you were buying a car before and anything additional was … well … additional.
You can still get one and when you are refinancing is a great time. Places like RateGenius offer these extended service contracts when refinancing. Or you can look for them on your own through a variety of dealers. There are so many options, but do your research and spend time to understand what they cover.
Keep in mind that it helps the resale value when you have a protection against unforeseen expenses. If you were buying a car previously owned, would you want one with protection against a failed transmission? Of course! And others will as well. There are ways of transferring your warranty to someone else if you sell your car in the future.
In any situation, do your homework and don’t let pesky sales people change your mind for you. Choose what is best for you and your personal goals. Refinancing your loan can be an awesome deal, but as with any contract, always read the fine print to ensure you and whoever buys your car are protected.
This is a guest post by Kate Morris. Kate is a car enthusiast and on a personal mission to save people from bad lending practices. She drives a Ford Mustang and loves every moment of it.