Spring clean your car loan
Posted on 15 November 2019
Spring is in the air, and if the urge to spring clean is taking hold of you, you can’t go wrong with a close look at your finances. This can be an excellent time of year to take stock of your position and set plans in place for where you want to be this time next year.
Your car loan is no exception and you’ll probably get a lot out of an annual health check. Here’s what to look out for if you decide to take stock of your position.
Review your progress
It can be rewarding to start the process of reviewing your loan by appreciating the progress that you’ve made. Take a close look at how much you’ve paid into your car loan, and how much you’ve managed to reduce the principle of the car loan since you began your repayments.
Add up the fees
Once you’ve given yourself a good pat on the back, you can also review the fees you have paid on your car loan. It’s a good idea to go through these and sense check that they relate to your understanding of the activity on the loan.
Finance companies manage a wide range of fees so if you do see something that you’d like to understand a bit better, pick up the phone and find out more. You may have been charged in error or you may be unaware of some of the conditions of your car loan: either way you will be better off for understanding the details.
Understand the price of settlement
While you are reviewing the activity on your loan, why not find out what the settlement figure would be if you chose to pay your car loan in full today. This is a useful figure to be aware of as it helps you to calculate how far you are from your goals and whether you could be better off elsewhere.
Take a look at the market
Once you’ve understood the details of your car loan position, it’s a smart move to take a look at the wider market and understand how your car loan compares with what’s on offer. Have interest rates changed? Changing rates constitute one of the main reasons why people change their car loans. Just be sure that you are aware of any early settlement penalties before you decide to go down this path.
How have you been performing?
If you had trouble paying off your car loan or meeting the financial terms of a contract in the past you may have had a lower than average credit score. A credit score is used by businesses to assess your likely ability to repay debt without missing payments or failing to meet the terms of an agreement.
If you’ve been careful and managed your car loan payments on time and for the right amount, your credit score may have improved. It’s worth finding out - poor credit scores can cause finance companies to increase the cost of borrowing in order to mitigate the risk of bad repayment behaviour. You may find you’re in a position to negotiate a better loan if your behaviour has changed.
Review your finances
A lot can change in a year - especially when it comes to personal finances. Keeping track of your financial position and your budget will allow you to understand if you can increase your car loan repayments and pay it off even sooner.
Faster repayment not only means less interest; it also means you’ll get access to your money sooner - allowing you to save or plan for the next thing you’re interested in. Just make sure you review the conditions of your car loan in case you incur an early repayment charge.
If your finances aren’t looking so flash, you may need to adjust your repayments to make paying off your loan more affordable. If you can, try to keep making payments of some kind as these will help you to minimise the cost of interest and keep you moving towards a date where the car loan has been paid off.
Spring is an excellent time to review your finances. Check that you’ve got everything performing well and you’re on track to hit repayment targets. Give your car loan a health check and you may find that tweaking your repayments or reviewing your interest could leave you in a better position. And of course you’ll get the chance to reflect on the progress you’ve made along the way.
If you have any questions about your existing car loan or would like to find out more about a new car loan, there’s never been a better time to contact our team. The friendly team at Enterprise Cars are happy to help you to build a car loan that works for you all year around: call us today to find out more.