Many drivers assume that once they finance a vehicle, their loan terms are locked in until the car is paid off. In reality, that’s not always the case.
Auto loan refinancing allows you to replace your current loan with a new one, often with a lower interest rate, lower monthly payment, or both.
For many borrowers, refinancing can be a smart financial move, especially if their credit has improved or interest rates have changed since they first financed their vehicle.
Here’s what you should know about how refinancing works and when it might make sense.
What does it mean to refinance an auto loan?
Refinancing your auto loan simply means paying off your existing loan with a new loan that has different terms.
Those new terms could be things like:
A lower interest rate
A lower monthly payment
A shorter loan term
When done in the right circumstances, refinancing can save you money each month and over the life of the loan.
Signs it might be time to refinance
Refinancing your auto loan may be worth considering if:
Interest rates have dropped
Your credit score has improved
Your monthly budget would benefit from a lower payment
Your original loan came from a lender with a higher rate
If any one of these things are true for you, now might be a great time to consider refinancing your auto loan.
Why a credit union?
Your original loan may have been through a bank or even the dealership you purchased the car from. However, credit unions are structured differently than traditional banks and car dealerships.
Credit unions are member-owned and not-for-profit. This means that credit unions are often able to offer better rates and more personalized service.
This can make credit unions, like TUFCU, strong options when looking to refinance your auto loan.
Explore refinancing with TUFCU
If you’re wondering whether refinancing could help lower your payment or save on interest, the team at TUFCU can help you explore your options.
Even if your current loan is with another lender, refinancing may be simpler than you expect.
Learning more about your options could be the first step toward saving money over the life of your loan.
And right now at TUFCU, you can refinance your auto loan and potentially lower your rate by up to 3%! Visit tufcu.org/vehicle-loans or give us a call to get started!