Let’s face it – although buying a car is easy, paying off your car loan isn’t. If anything, car loans seem to be getting expensive. In 2023, the average Australian living in a capital city spent $190.23 per week and $9,892 per year on their car loan. It was 22% higher than in 2022.
Is there a way to get you out of this pickle?
Yes, there is. We are talking about car loan balance transfer.
It may seem complex, but the car loan balance transfer is a powerful tool if you’re looking to save money on your car payments. In this quick guide, we will help you understand the essentials of transferring your car loan balance.
Let’s get started.
What is a Car Loan Balance Transfer?
A car loan balance transfer involves moving your existing car loan from one lender to another. Many car owners do this to take advantage of lower interest rates, better loan terms, or superior customer service. The car loan market in Australia is highly competitive, which usually makes it possible for you to find a better alternative.
Typically, transferring a car loan is beneficial when:
- Lower Interest Rates: You can find a lender who offers a lower interest rate. This can help you save money on your car payments.
- Better Loan Features: Some lenders may offer car loans with more flexible repayment terms. For one, they may not charge any penalties for making extra payments. This can help you repay your car loan sooner without additional financial burden. Secondly, some lenders may provide car loan transfers without service fees. So, you can transfer your car loan balance without extra charges.
- Consolidated Debt: Some lenders might offer a consolidated car loan transfer. If you have multiple debts, this option helps you consolidate them into one car loan. It simplifies your finances.
Steps Involved in Your Car Loan Transfer
Like every financial decision, transferring your car loan balance requires thorough research. It involves several factors, including knowing your current car loan balance, the terms of your loan, and finding a better lender.
Let’s break this process down for you.
Step 1: Check Your Current Car Loan
First things first, talk to your current lender and ask if they allow car loan transfers. If yes, do they charge any fees for transferring your loan to another lender? Get a clear idea of how expensive your car loan transfer will be. If you want to compare the two loans, you can use our online loan comparison calculator.
Next, check your current car loan balance, interest rate, and the terms and conditions of your loan. Knowing these details is necessary to make an informed decision. You can generally check these details through your lender’s online portal (website), mobile app, or by calling customer care.
Step 2: Shop Around
This is a critical step. When talking to different lenders or researching them, think about
- Interest rates
- Car loan transfer fees
- Loan tenure
- Repayment terms
- Customer service
- Other loan terms and conditions
Find someone who offers a better deal than your current lender. You can use our online services like Savvy to find a better deal for your car loan balance transfer. Another way is to ask your friends and family. They might know a lender who is a perfect fit for your needs.
Step 3: Calculate Your Car Loan Transfer Costs
Transferring a car loan involves some fees. For one, your existing car lender might charge you an exit fee. It may depend on the amount and tenure of your remaining car loan balance. The new lender may also charge a service or processing fee. Calculate these costs to ensure your car loan balance transfer makes financial sense. It should benefit you in the long run.
Step 4: Gather the Necessary Documents
Keep all the necessary documents ready when preparing for a car loan balance transfer. It will speed up your application. Here’s a checklist of documents you typically need:
- A copy of your driver’s licence or passport to verify your identity.
- Recent payslips or tax returns to prove your earnings.
- A utility bill or lease can serve as proof of your current address.
- Your credit score and history.
- Details of your current car loan.
- Details of your car like make, model, year, and VIN.
Step 5: Apply for the New Car Loan
Once you find the right lender, you can apply for the car loan. Fill in the application form and submit the necessary documents. The new lender may take four to five business days to approve your loan. After approval, the lender will pay off your existing car loan balance. They will transfer the debt to your new loan account.
Transfer Your Car Loan Balance Today
A car loan balance transfer is an excellent way to save money on car payments. It can help you pay off your loan quicker and boost your overall financial health in the long run. However, it’s about finding the right deal that suits your needs. Be sure you understand the terms of your new loan and the costs involved in the transfer. This should help you make an informed decision.
Thinking of transferring your car loan balance? You’ve come to the right place. My Money House is the one-stop shop for all your car loan needs. Call 1300 870 838 or fill out our online contact form to apply.
