Behind the Vault

Is It Time to Refinance Your Car Loan?

Have you been asking yourself, “is refinancing my car loan the smart move”? While it's not always the right choice, refinancing  an auto loan can save you money and provide benefits in certain situations. If you want to refinance an auto loan¹ from another financial institution, it might be something you’d want to consider doing with Family Trust. Let's explore why…

Interest Rates Have Dropped

Keep an eye on market trends. If overall interest rates have decreased since you got your auto loan, you might be able to secure a better rate by refinancing, regardless of changes to your credit score. Our rates have recently dropped, so this could be more savings if you refinance your car loan from another financial institution.

Your Credit Score Has Improved

If your credit score has significantly improved since you first took out your car loan, you might qualify for a lower interest rate now. Even a small reduction in your interest rate can lead to substantial savings over the life of your loan.

You're Struggling with Monthly Payments

If your current car payment is stretching your budget too thin, refinancing to extend the term of your loan could lower your monthly payments. Keep in mind, while this can provide short-term relief, you may end up paying more in interest over time.

You Want to Pay Off Your Loan Faster

Conversely, if your financial situation has improved, you might want to refinance to a shorter-term loan. This could help you pay off your car faster and potentially save on interest.

You're Unhappy with Your Current Lender

Sometimes, the issue isn't the loan terms but the lender itself. If you're dissatisfied with your current lender's customer service or practices, refinancing with Family Trust could solve these issues. We care about finding the solution for our members to reach financial success.

You Didn't Get the Best Deal Initially

Perhaps you accepted a high-interest loan from a dealership without shopping around. Refinancing gives you a chance to correct this and potentially save money when you secure better terms.

You Want to Remove a Co-signer

If you originally needed a co-signer to qualify for your loan, but your financial situation has improved, refinancing could allow you to remove the co-signer and take full responsibility for the loan.

Refinancing Might Not Be the Best Choice When:

• Your loan has prepayment penalties
• You're close to paying off your current loan
• Your car is older or has high mileage
• The costs of refinancing outweigh the potential savings

Before deciding to refinance an auto loan, it's necessary to run the numbers. Calculate your potential savings, factoring in any fees associated with refinancing. Our auto loan calculator might help you get an idea of what future payments could look like.

Remember, while refinancing can be beneficial in many situations, it's not a one-size-fits-all solution. Consider your unique financial situation and long-term goals before making a decision. Feel free to speak with a lender at Family Trust to decide if refinancing your vehicle is the best option for you. Message us using the chat feature on familytrust.org, on the Family Trust Digital App, or give us a call at 803-367-4100.

Need financial counseling? Members can request free financial counseling with our Certified Credit Union Financial Counselor, Rebecca Franco.   

1. Must be 18 to apply. Qualification is based on creditworthiness, income and other underwriting factors, and is subject to approval. Any vehicle financed with Family Trust must be a 2009 model or newer.