When the COVID-19 pandemic hit hard in early spring, our guess is that you didn’t give much thought to the end of the year. Many of us were likely focused on how to navigate the next few weeks or months. And now, here we are at the end of 2020. Maybe for you, like so many others, it’s been a challenging financial year, and you’re entering this Christmas season wondering how holiday spending can fit into your budget.
So, what are some ways you can free up cash for the holidays? You could take an inventory of your stuff and identify a few things to sell online, like that old rocking chair that nobody ever sits in. Or, between now and the New Year, you could trim some expenses that aren’t really essential, like making fewer trips to the coffee shop drive-through.
Here’s a third idea. It’s not flashy or creative, but it’s really easy. Are you ready? Refinance your car loan. That’s right. Depending on the age of your car, how long you’ve had your loan, and how much you owe, this could be an easy way for you to free up some cash for Christmas...and beyond. As you think about whether to refinance, keep these things in mind:
- If your credit score wasn’t too great when you initially financed your car, it’s possible that the rate and terms on your loan weren’t too great either. If you’ve improved your credit rating since then, that can translate into a lower rate or more favorable terms today.
- The longer you wait, the less sense it makes to refinance. Car loans are typically amortizing loans, meaning you pay most of your interest costs at the beginning of the loan.
- Reducing your loan term is a great way to pay off your car sooner. However, it doesn’t make sense to extend the term of your loan so far that down the road your car isn’t worth what you owe on it.
To help you decide whether refinancing makes sense, check out this handy tool. Assuming it does make sense, how much could you save? If you qualify to refinance your loan with ECCU, here’s one possible scenario:
Existing loan: ECCU loan:
Amount: $25,000 $25,000
Interest rate: 6.9% 3.13%
Term: 60 months 60 months
PAYMENT: $494 $451
That’s a monthly savings of$43, or over $500 each year. How’s that for easy savings?
If you’re interested in refinancing, ECCU is here to help! Members can refinance auto loans through ECCU to reduce their monthly expenses and breathe easier. Learn more and use our Auto Loan Calculator to see how much you could save!
If you’re not already experiencing the benefits of banking with ECCU, it’s easy to become a member. Get started today.
