Most consumers are familiar with mortgage refinancing, but members often tell us they didn’t know refinancing a car loan was an option. So what does it mean to refinance a car loan?
Car loans are typically financed with four- to six-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 or your credit score could add up to big savings. Here's what it means to refinance a car loan:
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. By refinancing, you could lower your auto loan payment while maintaining the same term. Or, you could receive a lower interest rate while keeping your current auto loan payment but reduce how long it takes to pay off the loan. In either case, you could save money with an auto loan refinance.
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 when you apply for auto loan refinancing. Lower auto loan rates not only reduce your monthly payment, they also reduce the amount of interest paid over the life of the loan.
Still asking yourself, "What does it mean to refinance a car loan?" Let us know. Our lending experts are happy to walk you through your options and help you to determine what is best for your financial situation. Call us at (800) 649-0193 to get started or stop by any branch.