If you are considering taking out a loan and have some assets in your name, be it a car or a property, you can consider refinancing. Refinancing is a type of loan that is guaranteed by an asset of the applicant, which results in much lower interest rates than ordinary loans directed to individuals.
Good for those who want to take a trip, invest in a postgraduate course, expand their own business or pay debts with high interest rates, such as credit card or overdraft. After all, while credit card interest rates go up from 10% per month, overdraft overdraft rates are above 8% and personal loans in finance do not go below 7% per month, refinancing rates revolve around 2 to 3%.
Refinancing can be used in many cases, let’s talk about how credit works and when you can use it. Check out what Good Lenders has to say on the subject below.
Speed to get money: vehicle refinancing
Perfect for those who need money to settle a more expensive debt or pay a course in cash, paying less interest. Typically, finance companies and banks refinance up to 70% of the vehicle’s value, fixed according to the Fipe table. Most do not accept warranty vehicles with more than 10 years of use.
Unlike property refinancing, which requires more detailed documentation, vehicle refinancing is quick and the money can go out in a few days. The car remains in your name but disposed of to the bank until you have paid off the debt.
Large sums: property refinancing
If you are in need of a higher amount of money, whether to invest in remodeling or expanding your own business or even in another property, refinancing properties may be ideal. Interest rates are lower and terms are much longer: about 300 months, that is, 25 years to pay, depending on the amount borrowed.
Keep an eye! Know the disadvantages of refinancing
The great advantage of refinancing – the lower interest due to the guarantee – is exactly the greatest risk of this type of loan. After all, if you are unable to pay off the debt, unlike the personal loan, which has the sanction of including your data in defaulting files, when refinancing it gets serious: you can lose the good. In that case, the vehicle or property will go up for auction, unless you pay the debt.
Is it worth opting for financing?
To assess whether or not you should take out refinancing, take an honest look at your financial life and the purpose of that loan. If the money you are going to get from refinancing will effectively solve your problems, if the question is to pay off debts, or make your dream come true, and if the installments will not compromise your finances, go ahead. If the money is used to expand the business itself, for example, and there is a guaranteed return, it is certainly worth it too. So, deeply analyze whether you need the loan.
Now, if your accounts will continue to be out of balance or there is a risk that the parcels will further out of control of the budget, it is better to take other measures than to risk losing an asset that will surely be missed in the future. If you have to find another option to get credit, take the time to read more about payroll and getting extra income.
Will you need a refinance? Do not forget these teachings before looking for the bank or financial!