Everything You Need to Know About Refinancing a Van
Table of Contents
2. Why would you want to refinance a van?
3. What are the pros and cons of refinancing a van?
4. Is van refinance right for me?
Is one of your New Year’s resolutions to take back control of your finances? Van refinancing could be just the solution for you.
In this article, we’ll be looking into refinancing your van and what it exactly means, as well as how it could benefit you and your business.
What is van refinancing?
Circumstances can change and you might be looking to reduce your monthly repayments on your van. With van refinancing, you can do exactly that.
When you refinance your van, you are replacing your existing loan with a more favourable one. This could be a lower interest rate, or longer repayment term to reduce your monthly payments. In short, you are effectively paying off your existing loan with a new loan.
Why would you want to refinance a van?
If you are struggling to keep up with your monthly payments, or simply looking to cut costs, van refinancing is a good option. You might also just be looking for a better van finance deal.
What are the pros and cons of refinancing a van?
As with any van finance option, refinancing a van can have pros and cons.
PROS
Lower interest rates – interest rates are always fluctuating, and they may have dropped since you took out your van finance deal. When you refinance, one of the most attractive benefits is a lower interest rate.
Lower monthly payments - ask anyone why they want to refinance a van and you’ll probably get the same answer. To reduce monthly payments. When you refinance, you can lower them with the help of a lower interest rate and a longer repayment term.
Financing on your terms - van refinancing gives you the flexibility to choose a deal that better suits your current financial situation. Whether that’s a shorter or longer repayment term or interest-only options.
CONS
Extra fees - van refinancing can carry extra fees such as application fees. It’s worth considering this if you are refinancing your van to try and cut costs.
Longer repayment term – while a longer repayment term will lower your monthly repayments, it can also have its drawbacks. Even with a lower interest rate, you could end up paying more interest over the course of your van finance deal. Keeping your van for longer can also mean that you’ll be out of the manufacturer's warranty period and need to pay for maintenance and repairs.
Negative equity – if your van is in negative equity (you owe more than what the van is worth), you might not be eligible for van refinancing. You could also end up paying a higher interest rate.
Is van refinance right for me?
This is completely down to your financial situation. There are a few things to take into consideration before refinancing your van:
Existing interest rate - before you refinance your van, make sure to check the interest rate on your current van finance deal. Compare the rates available when refinancing. If they are lower, it’s worth looking into van refinance.
Credit score – van finance companies will always take into consideration your credit score when you apply for refinancing. You may be eligible for a better interest rate if your score has improved since you financed your new van.
Additional costs – if you do decide to refinance your van, you may incur additional fees and it’s worth factoring this into your final decision.
Van equity – before considering van refinance, it’s important to check how much equity you have in your van. If you owe more than what the van is worth, you may not be eligible for refinancing.
Choose a reputable lender – research the best van finance providers before you commit to a new deal. Read our article on what to look for in a van leasing company.
Van refinancing FAQs
Can I refinance my van with a bad credit score?
It can be difficult to refinance a van if you have a bad credit score. It’s best to get in touch with your van finance provider and they will be able to explain the options available to you.
How soon can I refinance my van?
Van refinancing is available at any time, however, if you are changing to a new lender, they might require that you’ve had your existing deal for a set period.
Can I refinance my final balloon payment?
Refinancing your balloon payment is possible but there are a few things to note. If your van is worth more than the balloon payment, it could be a good option. However, if your van is worth less than the balloon payment, it might not be beneficial.
Does refinancing hurt my credit score?
If you decide to refinance your van, you might experience a small, temporary dip in your credit score.
This is simply because you are taking out a new loan and need to demonstrate your ability to keep up with repayments. But this should improve within a few months and may even be beneficial in the long run as it shows you can keep up with a new van finance deal.
Van refinancing at Vansdirect
At Vansdirect, we can help you refinance your van and help you get a better deal. Contact us today to see if you are eligible for van refinancing.
With our wide range of van finance options including van leasing, contract hire, hire purchase, and van fleet leasing, you won’t be short on choice.