September 8, 2016

TAGGED AS: Everything Auto

Most consumers are familiar with mortgage loan refinancing. However, members often tell us they didn’t know they could refinance an auto loan.

Vehicle loans are typically financed with 4- to 6-year terms. During the loan period, economic and financial situations can change. You may be able to proactively respond to these changes with an auto loan refinance. Improvements in market rates, your credit score, or your income could add up to big savings.

Rates Change

Annual percentage rates periodically change. If you purchased a car more than a year ago, it is likely that interest rates changed, possibly even decreasing. Refinancing could lower your monthly payment while maintaining the same term. Or, refinancing to a lower interest rate while keeping the same monthly payment could reduce the amount of time it takes to pay off the loan.

Credit Improves

Multiple factors are used in calculating credit scores, including payment history. After a year or more of timely loan payments, your credit score may have improved. A higher credit score could qualify for a lower rate. Lower rates not only reduce the monthly payment, they also reduce the amount of interest paid over the life of the loan.

Income Changes

If your income has increased, you may want to consider refinancing to a lower interest rate and shorter term. Both actions will save finance charges and increase your equity in your vehicle. Conversely, if your income has decreased and overextended your monthly budget, you may prefer to extend the loan term and lower your payment to help pay other expenses.

If you are unsure if an auto loan refinance is right for you, let us know. We are happy to walk you through the options to determine what is best for your financial situation. Call us at (800) 649-0193 to get started or stop by any branch.