You might benefit from refinancing if:
- Your credit has improved, which would qualify you for a lower interest rate.
- Your old loan’s rate is more than a couple of percentage points higher than current rates for refinancing loans being offered by lenders.
- Money is tight, and lowering your car payments would bring relief.
- The refinanced loan could pay off your existing auto debt and give you cash back to help manage other expenses.
- You don’t have a heavy prepayment penalty on your current loan.
- You still have enough time left and money owed on your loan that a refinance would bring meaningful savings.
By using an online loan calculator, you can see how different rates and terms would affect your monthly payment.
Finding the right lender
If you decide that refinancing your car makes sense, the next step is deciding which financial institution to go to. A couple of factors to keep in mind when deciding whether to go with a credit union or a bank are what the loan will cost you and what kind of service you’ll get.
Credit unions typically have lower lending rates than most banks. Some credit unions, like Matadors Community Credit Union, even offer incentives to car owners who refinance their loans, such as deferring the first payment for 90 days. If one of the reasons that you’re refinancing is that money is tight, having 90 days without a payment can offer some real breathing room. Keep in mind that with this option, interest will still accrue from the date of funding.
You also want a lender who has experience with refinancing, and is top in their community. MCCU was voted Best Auto Loans in 2018 by readers of the Los Angeles Daily News.
The bottom line
Refinancing your car loan1 is worth considering if you could benefit from a lower interest rate, a lower car payment or some extra cash to handle one-time expenses. It could be just the way to replace that borrower’s remorse with a sigh of relief and a smile.
Apply for your refinance with MCCU today!
1 Existing MCCU auto loans not eligible for refinance.
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