Why refinance your auto loan?
It’s no secret that car loans are a financial burden. As of 2021, the average American household owes more than $17,000 in car debt.
Fortunately, many lenders offer car owners the opportunity to refinance their loans. Here’s why refinancing your auto loan might be right for you.
You could secure a lower interest rate
By reducing your monthly interest payments, you could save thousands of dollars in total loan costs.
If your credit score or debt-to-income ratio has improved since you secured your loan, lenders will often offer a more favorable refinancing rate.
Even if your financial situation has not changed, you might find a more favorable loan from a different lender.
You can reduce your monthly payments
Sometimes, monthly loan payments become too great of a burden.
Whether your income has taken a hit or your expenses have increased, refinancing your loan to pay off the debt over a longer period can help you retake control of your finances.
You may pay a little more in overall interest, but your monthly car payments will become more manageable.
You could pay off your car loan more quickly
If, on the other hand, your financial situation has improved, you might be looking to shorten your repayment period. Though your monthly payment amounts will increase, the fewer overall interest payments can save you money in the long run.
Before refinancing, check to see whether your lender charges a prepayment penalty. If so, do the math; paying off the loan more quickly may not be worth the fees.
How to refinance your loan
If you decide refinancing your auto loan is the right choice for you, start looking for the lender with the best loan terms.
United Credit Union offers refinancing options with low monthly interest rates. Give us a call today to learn more.