A Car Loan Refinance Could be Your Key to a Better Financial Standing.
Is your current auto loan not meeting your needs? Is your rate is too high? Are your monthly payments getting the best of you? Have you improved your credit score and want to take advantage of your hard work?
If you answered yes to any of those questions, then a refinance could be for you.
A vehicle refinance involves taking out a new loan, with new terms, to pay off your current auto loan. People typically refinance when the new loan gives them the benefit of a lower interest rate, lower monthly payments, or a new loan term (length of loan).
So, When Should You Refinance Your Car Loan?
While not everybody loves their current car loan, knowing when to refinance can make all the difference in ensuring you’re getting the best deal you can get. Here are some key reasons to consider a refinance…
- You can get a lower interest rate.
- Current payments are too high.
- Your credit has improved since you started the loan.
- You want to work with a different lender.
Let’s dive a little deeper into each of these.
1. You can get a Lower Interest Rate
Everybody wants the lowest rates, right? Well, refinancing your vehicle can help you get better rates!
If your current auto loan rate is higher than other offers you’ve been seeing, a refinance could save you money over the length of the loan. Make sure you check with the lender to be sure you would be saving money over the long-term though!
2. Current Vehicle Payments are Too High
If you’re struggling to make vehicle payments, or just want some more wiggle-room, a refinance could free up some cash every month.
There are a couple ways a refinance could lower your monthly payments…
- You get a lower interest rate. Getting a lower interest rate at the same term means that you’re paying less each month in interest which typically means a lower payment.
- You extend the length of the loan. By keeping the interest rate the same but increasing the time you have to pay off the loan, your monthly payments should be lower. Something to consider though, by keeping the same rate and extending the length of the loan you could pay more over the course of the loan.
3. Your Credit has Improved since You Started the Loan
Congratulations! It sounds like you’ve been making timely payments, using credit responsibly, and you’ve been keeping an eye on your credit. Now it’s time to reap the rewards!
If your credit has improved since you took out your current loan, you may qualify for lower rates now. Speak with your current lender, or shop around, and find out what rates you might qualify for. You’ll be surprised at how much your hard work could “pay off” for you.
4. You Want to Work with a Different Lender
Sometimes it’s not the car loan, it’s the lender.
Working with a lender that works with you could save you time, hassle, and even money if you’re paying fees. Plus, you may even be able to get a better rate/term by shopping around.
Don’t feel stuck with your current lender, you have options.
So, When Shouldn’t You Refinance Your Car?
A car loan refinance isn’t always the answer. While many people can find value in refinancing their loans, every situation is unique. Here are a couple reasons that you may want to hold off on refinancing:
- You could end up paying more over the course of the loan. Depending on your situation, a lower rate on your car loan could mean you end paying more over the course of the loan. For example, if you extend the length of the loan, you may pay less each month but are paying on the loan for a longer time. Be sure to speak with a representative and figure out the best options for your situation.
- You’ve paid off most of the original loan. Typically with car loans you pay more interest at the start of the loan. Therefore, if you are almost finished paying your loan, even a lower interest rate might not save you as much as you’d expect each month.
“Be sure to speak with a representative to figure out the best options for your situation.”
How Can You Get Started?
If you’re ready to get started with your refinance, we’re ready to help. Just choose the option that works best for you.
- Online – If you’re looking for the quickest option without having to make a trip, go ahead and apply online. The application only takes about 15 minutes and you’ll get a decision within a couple business days. Just select “Refinance” from the “Vehicle Type” and you’re well on your way!
- In Person – You can visit any of our branches and work with our helpful, friendly staff. Just let them know you’re curious about refinancing your vehicle and they’ll walk you through the process.
- Over the Phone – Want to skip the trip but still work with our staff? No Problem! Give us a call at 217-278-7700 and we’ll help you with any questions and can even take your refinance application over the phone.
Our Auto Loans page has more information regarding current rates, offers, and loan services. Check it out if you haven’t already!