But all too often, there’s one thing people don’t change, even when it’s just not working for them: their auto loan. It’s likely that most people stick with a bad auto loan because they don’t fully understand the process or the benefits of refinancing. So, let’s take a look at how you could benefit from refinancing your auto loan.
Lowering your rate
Perhaps the most obvious benefit to refinancing your auto loan is the opportunity to lower your rate and pay less in interest over the life of your loan. Assuming the loan term stays the same, this means you also get a lower monthly payment. Right now, rates are still near historic lows, so it’s a great time to consider refinancing to reduce your rate and your payment.
Taking advantage of better credit
Your existing auto loan is based on the credit score you had at the time you financed your vehicle. So, if your credit has improved since then, you may also want to refinance. This can help you take advantage of the lower interest rate environment including additional rates that you would now qualify for.
Changing your terms
Another way to benefit from auto loan refinancing is by choosing terms that better suit you. When you originally financed your vehicle, you may have chosen a loan term that was too long and you’d rather pay it off sooner. Or you may have chosen a short loan term but struggle to make the monthly payments. Refinancing can be the path toward selecting a loan term that better meets your needs.
Updating loan features
As the needs of borrowers change over time, savvy lenders add options to better meet those needs. Refinancing can open the door to take advantage of those options – like Guaranteed Asset Protection or GAP Insurance, which pays the difference between your loan amount and your insurance payout in the event your vehicle is totaled or stolen. Refinancing can also allow you to get out of a loan that included options you really didn’t need. Working with a knowledgeable lender can help as you decide what options are right for you.
Getting a better lender
Many people don’t think about this aspect of an auto loan, but who you choose as your lender can make a big difference. Dealers do a great job at selling cars – but they’re simply not loan experts. Refinancing your auto loan puts you in control of who you choose as your lender, giving you the opportunity to work with an auto loan specialist who can work with you to determine your financing needs and customize a loan to fit them perfectly. Working with a not-for-profit credit union ensures that your loan is of good quality and a good value for you.
If you have any questions about refinancing your auto loan, the loan experts at PSFCU are here to help and give you the answers you need. We can help you understand if refinancing is right for you right now. Give us a call at 626.351.9651.