Should I Refinance My Auto Loan?

If you’ve ever wondered, “Should I refinance my auto loan?”, you’re not alone. Life changes, interest rates change, and your finances change too. Refinancing your car loan can sometimes help you save money, lower your monthly car payments, or even pay off your vehicle faster. But is it the right move for you? Let’s take a closer look.

What Does It Mean to Refinance an Auto Loan?

Refinancing an auto loan means replacing your current loan with a new one, often at a lower interest rate or with better terms. Your new lender (like your local credit union) pays off your existing loan, and you start fresh with new payments. It can be a great way to keep more money in your pocket each month.

When Refinancing Might Be a Smart Move

• Interest Rates Have Dropped
  Auto loan rates are always changing. If today’s rates are lower than when you first financed your car, refinancing could help you save money over the life of your loan.

• Your Credit Score Has Improved
  A better credit score often means better loan offers. If your score has gone up, you might qualify for a lower auto loan rate and reduce your monthly payment.

• You Want Lower Monthly Payments
  Stretching your loan term through refinancing can reduce your monthly car payment. This can be a big relief if your budget feels tight.

• You Want to Pay Off Your Car Faster
  On the flip side, refinancing to a shorter loan term might increase your monthly payment, but you’ll save on interest and own your car outright sooner.

When Refinancing Might Not Make Sense

• Your car is older or has high mileage (lenders may not offer refinance options).

• You only have a few payments left (refinancing won’t save much).

• The fees outweigh the benefits (always check for hidden costs).

Questions to Ask Yourself Before Refinancing

1. What new interest rate could I qualify for?

2. Will this refinance lower my monthly payment or shorten my loan term?

3. Are there any fees or prepayment penalties I should know about?

4. How much money will I actually save over the life of the loan?

In short, refinancing your auto loan could help you save money, get a lower interest rate, or ease your budget with smaller monthly payments, but it’s not right for everyone. The key is to run the numbers and compare your options.

Here at Elevate Credit Union, we pride ourselves on helping people across Northern Utah explore auto loan refinance options and find the rate that works best for their situation.

Thinking of refinancing? Stop by one of our three branch locations in Logan, Garland, or Brigham City to talk with one of our friendly loan officers or apply online to refinance your vehicle! We'll help you find an option that fits your needs.