Refinance Explained

How Refinancing Works

The process typically begins with an assessment of your current situation. Evogo Asset Finance, for instance, would evaluate your existing finance agreement, looking at details like the outstanding balance, current interest rate, monthly payments, and any associated fees.

Next, Evogo Asset Finance will explore refinancing options on your behalf. They’ll research different lenders and their refinancing products to find the best fit for you, comparing interest rates, loan terms, and any new fees that might apply. Once a suitable option is identified, Evogo Asset Finance will then apply for refinancing with the chosen lender on your behalf. The new lender will then assess your creditworthiness and the value of the goods you’re financing.

If your application is approved, you’ll enter into a new finance agreement. The new lender will usually use this new loan to pay off your existing debt. This means you’ll now have new terms, including a different interest rate, a revised monthly payment amount, and a new loan term. The rules around ownership of the goods will depend entirely on the specific type of finance product you choose to refinance into. For example, with a Hire Purchase agreement, you’d gain ownership of the goods after making the final payment.

For guidance on tax implications and to ensure optimal tax efficiency, please consult
a qualified tax advisor or accountant. Evogo Asset Finance does not provide tax
advisory services.

Features and Benefits of Refinancing

Refinancing offers several attractive features and potential benefits. You might achieve lower monthly payments, which can free up valuable cash flow. This is often accomplished by extending the loan term. You also have the opportunity to change your interest rate, potentially securing a lower rate that could reduce the total cost of your borrowing over time. For those managing multiple debts, refinancing can be used to consolidate them into a single loan, simplifying your financial management. Finally, you gain the flexibility to change the loan term, allowing you to either shorten it to pay off the debt quicker or lengthen it to reduce your monthly outgoings.

Pros and Cons of Refinancing

Pros:

• There’s a potential for lower monthly payments, easing your financial burden.
• It presents an opportunity to secure a better interest rate, potentially saving you money overall.
• You gain the ability to consolidate multiple debts into one manageable payment.
• You have the flexibility to adjust the loan term to better suit your financial goals.

Cons:

• You may end up paying more interest overall if you extend the loan term significantly.
• New fees may apply, such as application fees from the new lender or early repayment penalties on your old loan.
• Your goods could be at risk if you fail to keep up with payments on the new loan.
• Refinancing is not always available, as it depends on the lender’s criteria and your specific financial circumstances.

Who is Best Suited to Refinancing?

Refinancing can be a smart move for various individuals and businesses. It’s particularly well suited for individuals seeking lower monthly payments, especially if their financial situation has changed, making their current outgoings less manageable. It’s also ideal for those who can secure a better interest rate, perhaps because their credit score has improved or market rates have fallen, leading to potential savings. People wanting to consolidate multiple debts will find refinancing beneficial, as it can simplify their finances by combining various loans into one. It also suits those
needing to adjust their loan term, whether that is shortening it to pay off the debt faster or lengthening it to reduce monthly payments. Finally, businesses looking to improve cash flow can use refinancing to free up capital for other investments or operational needs.