Many East Texans spend summertime on the lake to beat the Texas heat. However, making large monthly payments on a boat could put a damper on that summer fun.
If you are making monthly payments on a boat loan, you may find that you can save money by refinancing, which will allow you to spend that saved money on more summer adventures. Refinancing means that you are trying to obtain more favorable loan terms. You can refinance if you want to pay less monthly, shorten the length of your loan, gain a lower interest rate, or all three. While there are many benefits, we’ve got the five most beneficial reasons for refinancing your boat:
Lower Interest Rate
When you refinance a loan, you often do so in order to receive a lower, more desirable interest rate. Normally, after paying on a loan for a while, your credit score increases, making you eligible for a lower interest rate. Additionally, over time, interest rates rise and fall with the economy. After a year or two of paying your original boat loan, you may find that interest rates have decreased, making it a prime time to refinance. With a lower interest rate, you will pay more towards the principal of your loan, so you will end up paying less on the loan overall.
Lower Monthly Payments
Refinancing an existing boat loan can not only lower your interest rate, but can also extend the loan terms, which lowers your monthly payment. A lower monthly payment is often more convenient and frees up space in your budget. Refinancing for lower payments is especially beneficial if you are having trouble making your current payments. Rather than allowing the boat loan to go past due, you can refinance to help you avoid late fees and the potential of a lower credit score.
Refinancing can be beneficial if you want to clear your debt in less time. When you refinance, you can choose to shorten the length of your loan terms so that you can pay the balance off more quickly with the new lowered interest rate. The payments might be higher, but you will pay off the loan sooner and pay less in interest, saving you money.
Option to Borrow Money
By refinancing your boat, you can borrow money with a cash-out refinance for home projects or other needs. Cash-out refinancing pays off your original loan and replaces it with a new personal loan for more than what you owe on the boat. The amount of cash you receive is based on how much equity there is in the boat. Equity is the difference between what your boat is worth and how much you still owe on the original loan. The benefit of a cash-out refinance is ready cash and lower interest rates on the new personal loan.
Option to Consolidate Debts
If you have other loans in addition to your boat loan, you could refinance and combine the loans under a lowered interest rate. The benefit of refinancing your boat to consolidate debt is that you can have all your loans in one place with one monthly payment. This option would involve a cash-out refinance, where the original loan would be replaced with a new personal loan for the amount of all of your loans together.
If you are looking into options to save you money this summer, consider refinancing your boat with us at United Credit Union. We believe fun is an adventure and we want to help you get there. With our great rates and flexible terms we will have you enjoying the summer in no time. Give us a call at 888-207-2188
to set up an in-person meeting.