Whether you want to lower your car payment or pay less interest on your car loan – see when refinancing your auto loan may be a good idea.
#1 You want a lower payment
If money is a little tight, refinancing your loan to a longer term can lower your monthly payment and help improve your cash flow. Although you’ll likely pay more in interest with the longer term, you can always make additional payments once your finances improve to pay off your loan faster.
#2 You want a lower rate
Using a car dealer’s lender can mean being stuck with a rate that’s higher than what you’d get at your local credit union. If rates are lower than when you got your car loan, a refinance can help you take advantage of lower interest rates.
#3 Your credit score has improved
Refinancing when you have a better score can help you qualify for a lower interest rate. If you’ve been on time with your loan payments for several months, youy credit score may be better than when you initially got your car loan.
#4 You want to pay less interest
Refinancing to a lower rate for the same term or less will help you pay off your loan sooner and reduce the amount of interest you’ll pay over the life of the loan.
#5 You can earn cash back
Many lenders offer special incentives and cash back offers when you refinance your auto loan from another lender. They may also offer no payments for 45 to 90 days, which is a nice break from your loan payment. Although interest will continue to accrue during the deferred time period, you can use that extra cash for other financial priorities.
Bonus - Another good reason to refinance your auto loan – an auto loan refinance is a fairly easy process and many lenders offer the option to complete the refinance process online.
Need help finding out if refinancing your auto loan makes sense for you? Contact an Arizona Financial Credit Union lending expert at 602-683-1730. Our team will be happy to review your options.