BMI Federal Credit Union
Refinancing Your Auto Loan
When, Why, and How
Is An Auto Refinance Right For You?
Four Reasons Why You Should Refinance Your Auto Loan
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1. Drop in Interest Rates
A drop in the interest rate is the first sign that you could save money. Refinancing to a lower interest rate can reduce your monthly payment.
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2. A Positive Change to Your Credit Score
Your credit score is an important determining factor for your loan rate. If you notice an increase in your score, you may qualify for a lower loan rate, even if overall interest rates have not dropped.
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3. Financial Troubles
If you are among those who've found themselves in a tight financial situation, it may also be a good time to look into refinancing your auto loans to lower your payments.
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4. A Change in Personal Status
In addition to saving money, you may have the option to change the status of owning your loan. In other words, you can refinance to remove any original co-signers from your loan, and have the entire loan in your name.
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Is Refinancing Always a Good Idea?
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Like with any financial choice, there are a few other considerations before refinancing. Review your current loan documents and look for a pre-payment penalty or an early termination fee - that is, a fee imposed if you break up with your current financier. You also want to consider changes to your loan term if you refinance.
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