Did you know an Auto Refinance can provide instant savings on your monthly car payment? Maybe you already knew that? Either way, read through to see if there is something more you can add to your own financial strategy!
Here's an example of what an auto refinance is:
You pay off your auto loan balance from one lender and transfer the balance to another lender with a better rate and/or term. For example, you have an auto loan with an APR of 7% and refinance with another lender to a new lower rate of 3%. The 4% drop in interest will provide you with a new lower monthly payment.
When it's best to refinance:
There are multiple opportunities in which it makes sense to refinance your auto loan. They are:
- Pay less in interest - If you find a lower rate than what you’re currently paying, you could save in the amount of interest you pay over the life of the loan.
- Lower payment - If you’re looking for a lower payment, a reduced rate and/or term extension could help.
- Shortened term - If you’re looking to pay off your loan earlier and can afford the payments, a refinance can help direct that money toward principle while paying less in interest.
The cons to refinancing:
When making any financial decision, it’s always best to weigh the pros and cons of each situation. When refinancing your auto loan, the option to extend your repayment period will allow for a lower monthly payment but it also extends the amount of interest owed. In general, you will pay more in interest over the life of the loan, even if your payments are smaller. You can also risk owing more than the car is worth if you extend your term too long. Use a financial calculator to compare your options.
When deciding if a refinance is right for you, have a clear goal in mind. Are you looking to reduce your payment, pay your loan off sooner, or maybe both! You have options. Do your research to find what other financial institutions have to offer; lower rates, no fees, and term options that work for you. Run the numbers and take advantage of the tools that are available to you as a member of SafeAmerica Credit Union.
Refinance with us
As a member of SafeAmerica Credit Union, you can refinance your auto loan from another financial institution and take advantage of exclusive member-only savings.
- Great rates
- Flexible terms
- No fees