July 2, 2020Benefits of Refinancing Your Auto Loan
Are your car payments wrecking your budget without putting a dent in your loan? Are you throwing away money in interest payments each month? If so, refinancing your auto loan may be an easy solution. It’s a painless process that could keep your money in your pocket.
Let’s review what auto refinancing is and how to decide if it’s right for you.
What is Auto Loan Refinancing?
Refinancing your auto loan sounds hard, but it’s simple. When you originally bought your vehicle, you likely financed it with the dealership or some other lender. By refinancing your loan, you are just switching it from your current lender to a new lender to save money.
Why Should You Refinance?
- Better Rates: You would want to refinance your auto loan to take advantage of better loan rates. If auto loan rates are lower than when you originally bought your vehicle, refinancing could lower your rate so that you pay less interest on your loan. You could also qualify for better rates if your credit score has improved. Either way, lower rates will save you money in interest as you pay off your loan.
- Quicker Payoff: Want to pay off your loan faster? Try refinancing to shorten the loan term. Your monthly payments will be higher, but you can significantly cut down on the total interest paid over the life of your loan.
- Immediate Financial Relief: If you need a lower payment for immediate financial relief, you could refinance to extend the term of your loan. But one of the risks is negative equity, meaning that the loan amount could end up being more than what the vehicle is worth. Most lenders will not allow you to go “upside-down” on your loan, but the Credit Union may offer other helpful options if you are experiencing financial hardships.
How Does Refinancing Work?
Auto loan refinancing is simple:
- Bring your current auto loan paperwork with the payoff amount to PEFCU; or apply online at www.PEFCU.com; or apply via the PEFCU Mobile Banking app.
- Once the auto loan refinances is approved, PEFCU will pay off your current loan.
- PEFCU will generate a new loan with a revised payment schedule.
We’re Here to Help!
If you are ready to put more money back in your pocket each month by refinancing your auto loan, we are here to help. We can answer your questions if you reach out to us via Live Chat at www.pefcu.com, via the messaging feature in the PEFCU Mobile Banking app, or by calling our Member Contact Center at (800) 226-6673.
Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel.