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When is the best time to refinance your auto loan?

Alysha Klein
By Alysha Klein - October 19, 2019

When is the best time to refinance your auto loan

Are you unhappy with your monthly auto payment?

Maybe you thought you had a great rate, but your monthly payment shows otherwise. If you feel that your auto loan interest rate isn’t ideal, perhaps it’s time you gave refinancing a look.

Just like you can refinance a mortgage or consolidate a credit card, you can change your auto loan and the terms too, by refinancing. You could be saving hundreds of dollars each year and sometimes close to a thousand dollars over the life of the loan.

So, when is the best time to refinance your car?

Here are four instances when you should highly consider refinancing your auto loan.

1-   Auto loan interest rates have dropped:

If you have found that interest rates have dropped even a couple of points since you made your vehicle purchase, it might be a very good idea to look into what options are available as far as a lower payment. When looking at the various types of loan options, it’s important to keep in mind that if you purchased a brand new car and are refinancing it, that car is now considered a used car. So be sure that you are looking at the correct interest rates when comparing lenders.

2-    Your credit score has improved.

Anytime your credit score improves it’s an opportunity to re-evaluate the current loans you have and see how you might be able to save money. Maybe when you were in the process of getting your auto loan, you had some issues on your credit report, issues that prevented you from getting a better interest rate but you needed that vehicle. Now is an excellent time to go back and see how you can lower that rate. Or maybe just paying your auto loan on-time has raised your credit score substantially and you feel that it’s time to reward yourselves with a lower monthly payment. 

3-    You didn’t get the auto loan best rate.

When you purchased your vehicle maybe you got caught up in words, “0% financing” and thought it was your lucky day! You couldn’t wait to sign the papers, but you forgot to read the fine print that says for six months only. Now you’re hit with an interest rate you didn’t see coming. That means it’s time to refinance! It’s easy to get caught up at the dealership with all the excitement of buying a new vehicle that sometimes we overlook that fine print.

4-    You’ve had some financial setbacks.

Maybe some financial setbacks came up like you lost your job or you had a raise in your rent. The last thing you want to do is default on your car payment, but it sure would be nice if you reduce your payments. Refinancing your auto loan is a great way to help give you some extra cash. Often you can choose a 72-month auto loan instead of the 36-month auto loan, and this will allow you to save on monthly payments and give you some extra cash for those financial setbacks.

Refinancing an auto loan can be done at any point in the life of the loan. Stop throwing away money, stop stressing over your current monthly payments and start talking to a Tropical Financial representative about the options available to you when you refinance your loan with TFCU. If interested, consider applying today, below.

 

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The content reflects the view of the author of the article and does not necessarily reflect the views of Tropical Financial Credit Union or its employees.
We do not guarantee the accuracy or completeness of the information presented in the article.