Should you refinance your auto loan?
Refinancing an auto loan means paying off an existing loan from one lender with funds from a different lender for a variety of reasons, such as getting a lower interest rate, that might make financial sense. Here are a few things to consider when deciding if an auto refinance is right for you.
1) You can get a better rate
Loan rates have decreased to the point where it may make sense to refinance so you pay less interest. Or maybe when you purchased your car, you chose dealer financing which might not have been the lowest rate. If your credit score has increased since you purchased your car, you might qualify for a lower rate, too.
2) You can financially handle a larger payment
If you bought your car a few years ago, you may have opted for a longer term such as 72 or 84 months. A shorter term means a larger monthly payment, but it also means a lower rate and less interest paid over the length of the loan. Your paychecks may have increased over the last few years, making it easier to afford higher payments.
Ready for lower monthly payments? Apply online and get a decision on your loan in minutes.
3) You need a smaller payment because you are buying a house
If you are considering buying a house, it might make sense to refinance to a longer term to reduce your current auto loan payment in order to qualify for a home loan.
4) You can make bi-weekly payments
Making an auto loan payment every time you are paid can definitely save on overall interest, plus you will pay the loan off faster than the original term. You are making 13 payments a year when you make bi-weekly payments instead of the usual 12 payments a year. If you have an auto loan at Heritage, it’s easy to set up automatic transfers with our mobile and online banking tools.
The bottom line is you can often save money on interest or pay your auto loan off sooner with an auto loan refinance; two things that can improve your finances. Check out our current rates and calculate your new loan payment to help you decide if this is the right move for you.
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