The Benefits Of Refinancing Your Car Loan In Canada

Posted by on August 05, 2019 @02:36:54 EDT

The prospect of refinancing your car loan in Canada can be a daunting one, all the more so because you’ve probably been working on your credit repair strategy, which itself demands enough of your bandwidth.

After all, it’s not like you need any more hassle in your life, so why wouldn’t you just leave your loan where it is and keep going with what you’ve been doing?

The answer to that question is because if your credit score is healthier than it was when you first got your car loan, the chances are that you’re eligible for a whole range of financial benefits. We decided to outline the four biggest advantages to refinancing your car loan, to help you decide whether or not this decision is a good one for your situation.

Increased Amount Of Cash On Hand

A person holding a number of dollar bills.

One of the undisputed advantages of refinancing your car loan, especially if you’re in a situation where you need to be looking into practicing credit repair, is the amount of liquid cash you’ll find yourself with after you’ve got your new deal done and dusted.

Of course, this is taking for granted that you already have a well-defined budget structure with which you’re working, so that any sudden influx of cash will make a noticeable difference.

This comes about as a consequence of lowering the overall payments. Although the specifics of how those overall payments are going to be lowered will vary (for example, it could be as a result of a longer overall loan term, or of a better interest rate), the one thing that won’t change is the fact that you’ll suddenly find yourself with a whole lot more disposable income than you had before.

This could be used for any number of things, from planning a weekend getaway to getting that new wardrobe you badly need, but if you’re thinking about performing credit repair on your ailing score, we here at highly recommend putting it straight to work as a way of paying off other financial commitments.

If you don’t have the kind of budget structure that will show you immediately how much more cash you have on hand to spend, we’re going to go so far as to say that that should be your number one priority.

Not only is it an absolute must in terms of getting your credit repair journey well underway, it’s a habit that is going to pay dividends down the line if you can manage to make it stick as soon as possible.

Credit repair is straightforward, but that doesn’t mean you’ll one able to make it happen by simply winging it. A budget is absolutely essential for all aspects of your financial life, and refinancing your car loan in Canada is only one situation in which it’ll make its usefulness immediately clear.

Lower Payments By Extending Loan Length

A carrot being measured, showing length.

Another major plus of managing to refinance your car loan in Canada is the control you’re going to have over the terms of the loan, including how long you have to go until it’s completely paid off.

If you’ve been getting into credit repair, odds are your score wasn’t perfect when you negotiated the first loan, and you may well have found yourself tied down into a payment plan that wasn’t very flexible at all.

You probably didn’t have much say as to how long you’d be able to make the payments over, but that’s all going to change if you’ve been performing credit repair and your score is sufficiently improved to be able to consider negotiating a new automobile loan deal.

At first glance, extending the terms of the loan can seem a little counter-intuitive. After all, isn’t one of the main reasons you’ve been working on credit repair for your credit score to be able to get shorter terms, in order to pay the thing off that much more quickly? And people arguing that side of the debate would have a good point, too.

The longer your loan goes on, the more likely it is that you’re going to have to cough up additional funds before you even own the vehicle. If you break down before you’ve paid off the whole car, for example, those repairs are essentially money going out of your pocket towards an item that you don’t even own.

However, that’s not the full story, and we’re here to tell a different side of it. Increasing the amount of time you have to pay off the car in full, by definition you’re committing yourself to lower monthly payments. After all, that’s how the whole process is organized, as you’re no doubt aware if you’ve been putting those credit repair strategies to work on your own credit score.

Lower monthly payments mean more money you’ll suddenly have lying around, which you can spend on anything you want, really. In this sense, this benefit is quite similar to the first benefit on our list, but with the added bonus that it’s a long-term cash flow increase you’ll begin to see inching your bank accounts towards the black as opposed to short-term deposits of cash that you’ll be able to put to work day today.

Potential To Change Lenders

Just because you’ve negotiated a car loan with a certain dealership, it doesn’t have to be the case that you necessarily like the way they operate, or how they deal with you as a customer. If you need credit repair, your score probably wasn’t great, and some lenders are notorious for treating customers with poor credit scores unfairly.

Whether that manifested as not being able to have much say in how the loan was structured, or whether it’s just that they were a little slow to pick up the phone or to offer a helping hand when you needed it, the fact is that if you were unsatisfied with the service they provided you, you have every right to go looking elsewhere for a company that might treat you better.

As another bonus, the other lenders you may find yourself talking to are only going to see your new and improved, post-credit repair score, and so they’re going to deal with you much more kindly right off the bat, and there’s no reason to think that level of customer support is going to stop anytime soon.

Indeed, it might well be a constant throughout your relationship with them. If your mother, or girlfriend, or co-workers have been banging your door down talking about how all their lender takes care of them with regards to their automobile loan, now is the perfect chance to go and explore those other options and figure out if some might be a better option for you in your current financial situation.

Looking at the problem from a credit repair perspective, changing lenders is a good thing to have on your credit history (which itself is the single most important variable in any credit score calculation algorithm) because it shows that you have a good handle on how much you’re worth as a buyer, and that you take your own finances seriously enough to change when something doesn’t smell quite right to you.

The potential to change the company who are on the lending end of your new, refinanced vehicle loan is one of the biggest pluses to renegotiating your car loan in the first place, and though it can often be overlooked in favour of some of the more immediately-obvious financial incentives, it definitely shouldn’t be ignored.

Lower Interest Rates

Last but not least, you’ll be able to potentially renegotiate lower interest rates on the loan for yourself. This is similar to the second benefit, in that it has to do with the terms under which the loan deal is constructed to begin with.

As we mentioned above, if you’re working on credit repair, odds are you didn’t have much choice when it came to being able to work out the various ways in which loans can be paid back. While considers every single application we get, irrespective of the credit score (making us an excellent choice for buyers whose credit score isn’t ideal, and who might be practicing credit repair), not every dealership or lender behaves like this, so it’s good to be able to figure out who’s on your side and who isn’t.

As well as the length of the loan, interest rates are the other main way your credit score is going to come back to bite you, or help you out, with regards to offsetting the risk incurred by any lender once they sign a contract with you.

Money paid in interest doesn’t go towards the value of the vehicle at all: it’s just a way to essentially make the lender feel a little more comfortable in terms of giving you money with a promise of getting it back later on. Keeping this in mind, it’s plain to see that the lower interest rates you can secure for yourself, the more of your monthly payment will be going towards the value of the car, and the healthier your finances will be all around.

Another big positive of securing lower interest rates for your car loan is the peace of mind that will be granted to you simply by virtue of making that one decision. Interest rates are cruel. You don’t notice them in the short-term, but when you’re looking at your financial health from a bird’s eye view, they really do stack up.

Lowering the interest rates you’re paying is a good idea for any kind of financial commitment you’ve undertaken, and cars are no different. Plus, it’s a way to make sure that your credit repair journey can stay on the right track, and can often work as a failsafe to ensure you won’t get derailed by suddenly not being able to make certain payments.


So there you have it. There are plenty of benefits to renegotiating your car loan in Canada, but for the sake of brevity (as well as your sanity), we’ve decided to focus on the four main ones which you’ll be able to see have an immediate impact on your day to day life.

Given the way humans work, if you can see the tangible benefits of a course of action, you’re much more likely to take it, and because we’re interested in informing people as to how they can improve their financial health (of which credit repair is only the biggest and most robust method), we think it’s crucial to outline the most immediate benefits you’ll experience as you go about trying to secure yourself a new deal.

While the list above is in no particular order, each of the benefits plays their own part in your overall financial situation, and none of them should be overlooked.

While you’re here, did you know that at we provide a number of different services designed to help people out who might have a bad credit score for various reasons? We’re always available, so why not consider giving us a call or shooting us an email? We’d love to work with you and see which of our services we can use to help you out with your particular situation.

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