If you’ve purchased an automobile recently, you may suffer from sticker shock. It’s happened to the best of us. With the price of today’s automobiles so high, it’s common for consumers to think about ways to lower their rates to make their vehicle purchase more affordable. Refinancing an auto loan means that you are replacing your existing loan with a new one—it usually means you’re trading in one lender for a different lender with a lower rate. The best part is that the steps are simple. You can apply online with most financial institutions, just select auto refinance and the online application will walk you through all the questions your credit union needs to know.
The process is easy and if it can save you money, then it’s well worth your time. Saving money is usually the top reason anyone would consider auto refinance, but here are some other considerations:
You’ve built enough equity in your auto purchase to remove your co-signer
If you’ve built enough equity in your auto loan and you would like to remove the cosigner from your original note, refinancing your auto loan is a great move. It not only helps relieve any added stress for your co-signer, but it can also lower your rate and payment which is a bonus!
Interested in a shorter loan term
If you’ve paid on your car loan for a while and want to reduce the term on your loan, refinancing might be an excellent choice for you. Interest rates are usually lower on shorter term loans. For example, the interest rate on a 3-year term is lower than the interest on your 6-year term note. If you’ve paid off the first 3-years, why continue to pay a higher interest for an additional 3 years? If you want to be sure this will save you money, run the numbers with online calculators to see if it makes sense. It’s important to note though that usually your financial institution will not refinance your auto loan at this juncture, so it’s highly likely that you’ll need to work with a new lender.
Lower your rate with a higher credit score
If your credit score has improved drastically since you bought your vehicle, you may want to refinance your auto loan. Most likely you’ll be able to lower your interest rate, which will lower your monthly payment. You want to avoid doing this until you think it’s unlikely that your credit score will increase more than it already has. You want to wait until you think your credit score is as good as it’s going to get for the time being that way you are utilizing the auto loan refinancing the most effectively.
If you’re interested in refinancing your auto loan, consider Triangle Credit Union. With competitive rates, you may be able to reduce your monthly payment; plus, Triangle has options to finance an extended warranty and GAP coverage.
In summary, refinancing your auto loan may be a great option if your situation has changed positively since you took out your first loan, and refinancing your auto loan is a straightforward process and worth the time.
