Borrowers are obliged to repay borrowed principal amounts and other additional costs, including loan fees and interest rates. However, some of them end up needing better terms and conditions than initially agreed for several reasons. Some of the possible reasons for wanting to refinance include the desire/need to:
- Get reduced interest rates.
- Change loan terms.
- Consolidate debts.
- Reduce monthly payments.
- Have a cosigner released.
- Improve credit terms.
- Switch lenders.
- Adjust the loan type.
In light of the aforementioned, you can see that there are several reasons why refinancing may be considered or needed. However, it is worth mentioning how some of the above reasons are more common than others. For more information on this, you can visit: https://www.cbsnews.com/.
Car loans are one of the several credit lines that can be refinanced for any of the aforementioned reasons and more. Considering how there are many people thinking about refinancing their car loans, this article discusses some conditions for getting this done in Norway. Read on to discover more about this.
Some Conditions for Auto Loan Refinancing in Norway
For the record, auto loan refinancing can either be secured or unsecured. This means that the credit line can be secured by pledging suitable collateral, or simply by borrowing based on your creditworthiness. However, this article is more concerned about securing such credit lines with collateral.
You should also know that a lot of the terms for securing such are determined by the location. Against this backdrop, this article will make the Norwegian credit system the focus here.
Furthermore, some requirements for securing such are not just about the location. Some are down to the way lenders choose to operate in the financial market. Therefore, this also has to be taken into serious consideration by prospective borrowers. Having made all these clear, discussed below are some of the common requirements for being granted secured car refinance loans in Norway:
Same Borrower Policy
A refinance loan implies that there is a pre-existing loan(s). Well, one common policy is that the applicant has to be the person who took out the pre-existing one.
In other words, a different person cannot take out a refinance loan to pay off your pre-existing debts. In the same vein, you cannot apply for refinancing to cancel out someone else’s debt(s).
However, it is possible to apply with a co-borrower. This is even if the pre-existing loan(s) did not have a co-borrower. By the way, application with a co-borrower increases the chances of being granted such credit lines and even securing improved terms. Thus, these are major reasons why many people apply with a co-borrower.
Similarly, it is also possible to let go of a co-borrower with this arrangement. This means that the preexisting loan must have been secured with a co-borrower. Refinancing makes it possible for co-borrowers to part ways. This is also one of the several reasons why debt refinancing is considered.
Car Insurance Matters
A lot of secured car refinance loan deals use the purchased automobile as collateral. As a result, the state of the vehicle and the amount of liability coverage that it has matters a lot. This is why insurance is a major requirement before being granted this kind of credit line.
It is required that the vehicle has a full insurance status if the borrowed amount exceeds a certain amount. More often than not, funds exceeding 100,000 Norwegian kroner fall into this category. As for loans below this amount, insurance is still vital. However, the applicant does not usually need to have full vehicle insurance. It could be partial insurance.
Age of the Vehicle Matters
A car is an asset but a depreciating one. What this means is that it loses value with time. Increased mileage and new automotive trends are some of the factors responsible for this.
To put things in a better perspective, a 10-year-old vehicle would normally have less value than a 2-year-old vehicle. This is especially true if both cars are within the same value category.
This therefore impacts the repayment period. It is then expected that the loan will be repaid within no more than 12 years. By the way, some lenders would not exercise as much patience. You also need to consider this when choosing a lender for secured auto refinancing deals.
There May Be a Need for Equity
As a result of the depreciating asset features of vehicles, long-term repayment deals may require more than just the vehicle as collateral. There may be a need for equity, in addition to this. However, this is majorly down to the lender’s policy and leniency, as the case may be.
Vehicle Registration
There is a link between a vehicle’s registration and its location. This is why vehicle plate numbers are location-based, for instance. Furthermore, the license to drive vehicles is also location-based. This is why authorization to drive in one place does not necessarily translate to authorization to drive in another place.
Having made this clear, some lenders would not consider granting such credit lines if the vehicle is not registered in this country (Norway). By the way, this also applies to vehicles that are imported but registered in this country.
Collateral-to-Loan Ratio
Usually, the amount that can be borrowed with a secured refinance loan or any other kind of secured credit line is a portion of the collateral’s value. For example, it could be 80 percent of the collateral’s value.
To help you better understand, this means that a person can borrow as much as 800,000 Norwegian kroner if the collateral’s value is a million Norwegian kroner. That is because 800,000 Norwegian kroner is 80 percent of a million Norwegian kroner.
Be that as it may, it has been discovered that some lenders would be willing to lend as much as a hundred percent of the collateral’s value. However, the chances of getting such billån refinansiering, which is the Norwegian translation for “car loan refinance” deal, usually depend on two things, at least. The first is the lender’s policy.
This is important as some lenders do not have credit policies that allow for this. People in need of such have to find lenders that do not have restrictive policies in this regard.
Secondly, the borrower’s credit status also matters. In other words, these are deals that are only granted to the most creditworthy loan applicants. The implication is that lenders who are willing to do this would only consider applicants with good credit scores and credit profiles.
For the record, this is why creditworthiness also matters when it comes to getting secured loans. This is even though creditworthiness is more of a priority for unsecured loans.
Conclusion
This article has focused on some of the requirements for getting secured car loan refinance deals in Norway. However, it is worth mentioning again how this is not the only kind of refinance loan deal that can be gotten. It is also possible to get unsecured deals, as well.
However, some distinct rules apply. For example, most lenders that offer such operate with credit caps. This means that this is a credit limit to what applicants can secure. Generally speaking, the highest amount that can be secured is 600,000 Norwegian kroner.
Some lenders have much lower credit caps than this. For example, some have credit caps as low as 350,000 Norwegian kroner. For this reason, the amount that you intend to secure should also determine your choice of a lender.
