Thinking about refinancing your auto loan? Before you do, we recommend considering the current state of your finances and doing some additional research. There are also a few other factors you’ll want to keep in mind before moving forward. We’ve put together the following list of important points to help you figure out if now is a good time for you to refinance your auto loan.
Your credit score has gone up
If your credit health has improved since you initially financed your car, now might be a great time to consider refinancing. Your credit score has a big impact on the interest rate you’ll receive when refinancing—and a lower interest rate will ultimately mean paying less over the life of your loan. Do some research to determine your current credit score and see how much it could help you save.
Note: ECCU requires a minimum FICO score of 640.
You want to lower your monthly payment amount
It’s a great idea to refinance if you want to change the term of your current auto loan. You can either extend the length of your loan to decrease your monthly payments or decrease the length of your loan if you want to pay it off quicker. Keep in mind that if you increase the length of your loan, you’ll oftentimes end up paying more toward interest costs, unless you start paying extra to catch up and pay it off before your loan term ends.
Note: 84-month terms are available through ECCU to those with a 700+ credit score, maximum vehicle age of 10 years, and maximum mileage of 125,000.
You don’t have any prepayment penalties on your current loan
When you refinance, your new loan is used to pay off the current loan you have. Before refinancing, you’ll want to take a look at your current loan contract and make sure that it doesn’t include any prepayment penalties. If it does, calculate if paying the penalty is worth it based on how much you would save by applying for the new loan.
Note: Enjoy zero fees and no prepayment penalty when you refinance your auto loan with ECCU.
Your car is 10 years old or newer
Most lenders won’t refinance cars that are over 10 years old. Before you consider refinancing, be sure to ask what the car age and mileage restrictions are for the particular loan. For example, ECCU requires that your vehicle be 10 years old or newer, with less than 125,000 miles. If your car falls within this category, then you should be in the clear!
If any of the above points apply to you, and you’re looking to save money on your monthly car payments, then now may be just the right time to consider refinancing your auto loan. Before you get started, be sure to review your current credit score, APR, loan length, and double-check the age and mileage of your car.
Members who refinance with ECCU enjoy low rates, a quick application process, zero fees, no prepayment penalty, terms up to 84 months, and even some additional bundle discounts (exclusions apply).
Learn more and see how much you could save by using our Auto Loan Calculator!