What does refinancing your auto loan mean and how does it work?

by ECCU

whats_an_auto_refi

January 27, 2021

If you’ve taken out a loan to pay for your car, refinancing could be a great way to lower your payments and build more room into your budget. Here are some of the most common questions we get asked when it comes to auto loan refinancing.

What does refinancing my auto loan mean?

Refinancing your auto loan means paying off your current car loan with a new loan to save on your monthly loan payment amount and/or your total interest cost.

How does refinancing save me money?

You can save money on monthly payments and your total interest cost on your loan by refinancing at a lower interest rate. Another way to save is by extending the term of your current loan. This can increase the total interest cost on the life of your loan, but is a great option if you need to build some breathing room into your budget to help make ends meet. And, when you’re able to, you can start paying extra on the loan to catch up and pay it off before the term ends, saving you extra on the interest cost.

How much can I save by refinancing my auto loan?

Find out how much you can save by using our Auto Loan Calculator. We’ll ask you to enter your current total loan amount to estimate your new monthly payment.

How important is my credit score?

Your credit score plays a significant role in determining your refinance rate. Having a higher score will typically guarantee a lower interest rate on your loan. If you haven’t checked your credit score in a while, now might be a good time to do so. Click here to learn how to access your credit score for free with ECCU and SavvyMoney! 

Don’t have the best score at the moment? We recommend reading SavvyMoney's taking steps to improve your score before you apply for auto loan refinancing to ensure you get the best rate.

What are the next steps to refinance my car loan with ECCU?

  1. Log in to online banking and select “Apply for an Auto Loan” to fill out a loan application.
  2. Once submitted, you’ll receive a decision via email within two business days. This is a great time to start getting your documents ready.
  3. If your application is approved, you’ll be asked to provide a copy of your registration and latest statement.
  4. Sign your loan documents, and you’re done!

Refinancing your new or used car loan doesn’t have to be complicated. If you’re looking to save money and get debt-free sooner so you can start working toward your other financial goals, then refinancing may be the right next move for you.

Lower your monthly car payments by refinancing your auto loan with ECCU today!

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ECCU is committed to helping guide you in making wise financial decisions that will impact you far into the future. No matter what the current state of your finances is, our team is here to review possible solutions with you to ensure financial stability and wise stewardship of your current resources.

Category: Common Cents