When Is It a Good Idea to Refinance Your Auto Loan?
When you refinance your auto loan, it can lead to loan terms more suitable for your situation, and there’s no minimum amount of time you must wait before applying for a new auto loan. So long as you have the necessary documentation and meet the requirements of a new loan, you’re welcome to refinance.
When to Refinance Your Auto Loan
You Qualify for a Better Interest Rate
Most people who refinance an auto loan do so in order to get a better interest rate. A better interest rate is usually a lower interest rate, but sometimes it’s simply moving from a variable rate (which can go up and down) to a fixed rate (which doesn’t change). You’ll certainly save money if you can get a lower interest rate, and you’ll eliminate the risk of rate increases due to market fluctuations if you secure a fixed interest rate.
If you qualify for a lower interest rate, even a minor reduction in annual percentage rate (APR) can result in a substantial amount of savings. Since the interest rate will reduce how much interest is charged each month over the full course of the loan. The most common way to qualify for a better interest rate is to increase your credit score, and it’s worth checking for a lower rate anytime you significantly raise your credit score.
You Need a Lower Monthly Payment
In a few situations, people may refinance an auto loan in order to reduce the monthly payment. A new loan will likely have a lower monthly payment if the loan either comes with a lower interest rate or is extended over a longer period of time. If you’re struggling to make ends meet each month, refinancing to get a lower payment could ease your monthly cash flow issues. This is most often necessary if your financial situation changes.
Note: You don’t have to refinance if you wish to make higher monthly payments. Most loans allow the borrower to simply submit a higher monthly payment and pay the loan off before its maturity date if the borrower wants to.
You Want to Remove a Cosigner
If you initially needed someone to cosign your auto loan with you but have since improved your own creditworthiness, you may be able to have the cosigner taken off of your auto loan. Refinancing a new loan by yourself would be one way to do this, but it isn’t always necessary. Some loans will allow you to remove a cosigner if you meet certain requirements.
Refinance Your Auto Loan with CCCU
If you’d like to refinance your auto loan, let Clark County Credit Union help. You can either fill out the auto loan inquiry form online or get in touch with a representative directly at 702-228-2228. We’ll have a quick answer on what sort of new auto loan you can qualify for.