Refinancing your auto loan is an easy, fast way to save some money in your monthly budget. But it’s important to understand the factors that help determine if the time is right for you. Here is a look at some of the leading reasons members choose to refinance their existing auto loans.
Lower Your Monthly Payment
Most people who choose to refinance do so because they want to lower that monthly payment. You can do this by extending the term of the loan or by lowering your interest rate. The first option, going from a shorter-term loan to a longer-term, is going to lower your payment the most, and sometimes we’re at a point in our lives where it makes sense to do that. The second option, lowering the interest rate, also can save a few dollars each month, and the less you pay in interest is always the best way to go.
Lower Your Interest Rate
Let’s be honest, there are times in our lives when we just don’t make the best financial decisions. Maybe you bought the car of your dreams at totally the wrong interest rate. Don’t beat yourself up! Those dealers make their money on not only the cars they sell but also the financing they can get you into. And if, by chance, that might be you, then your credit union is happy to help with a no-judgment auto-refinancing option that makes sense.
Furthermore, interest rates are an ever-moving target. They go up, and then they come down, and when they come down you might have a great opportunity to lower monthly payment by refinancing.
Your Credit Score Has Improved
You should be aware that your lender has charged you an interest rate that depends on your credit score. If you have a challenged credit history, then you are paying a higher interest rate. But if you’ve been paying on that loan for a year or two and have had good credit otherwise during that time, your score likely has improved, and it probably makes sense to contact a lender (like us) and see if we can save you some money!
Shorten the Length of Your Loan
Have you ever just wanted to be done? #Knowthefeeling. While extending the length of your auto loan can help lower your payment each month, refinancing to a shorter-term can help you get the loan paid off altogether, which is obviously what we all really want. And don’t knock it till you try it, meet with one of our loan experts to see if this would make sense in your budget. Just think how you’ll feel when it’s all paid off!
Not Happy With Current Lender
Sometimes in our lives, we all have pain… We all have sorrow… And if your lender is a pain and is causing you sorrow, then it’s definitely time to move on. There are lots of things to look out for: hidden fees, poor service, refusal to give an explanation on why a decision is made. Whatever. That’s all you need to say. Bad lenders are out there. Just be aware that many lenders will want to see some payment history before you move to your next financial institution.
Ready to Refi?
If you’re ready to move on from your current loan for these or any other reasons, then the Compass staff is standing by. You can complete the entire process online from a computer or your mobile device. Click below to get started. Find out if an auto refi makes sense for you!