Auto Loan Refinance

When you refinance an auto loan, you replace your existing auto loan with a new one that may offer better terms or a lower interest rate. This can help you save money by reducing your monthly payments or adjusting the loan term to better fit your financial goals.

Choosing whether to refinance your car loan depends on your personal financial situation and goals. Refinancing may help you save money, especially if:

• You qualify for a lower interest rate.
• You want to lower your monthly payment to improve your cash flow.
• You want to shorten your loan term and pay off your loan sooner.

Learn more about when it might be the right time to refinance.

Refinancing your auto loan is a pretty straightforward process:

• Check your credit score. If it’s increased since you got your original loan, you may qualify for a better rate.
• Review the details of your existing loan, including your current rate, remaining balance, and any prepayment penalties.
• Shop for and compare interest rates and loan terms from trusted lenders (like MCU!).
• Apply for the refinance loan and provide the required documentation.

When you complete the process, your new lender will pay off your old loan, and you’ll begin making payments on your new loan. For a complete step-by-step guide, read our in-depth article on how to refinance your car loan.

Once you refinance, your new lender will pay off your old car loan. You’ll then make payments to the new lender under your new loan agreement.

Most auto loans don’t have prepayment penalties, but it’s important to review the terms of your current loan before refinancing. If there are fees for paying off your existing loan early, you’ll want to factor those costs into your decision about whether to refinance.

It can, but it doesn’t have to! Refinancing gives you the flexibility to choose a loan term that fits your budget. Extending your loan term may lower your monthly payments but keep in mind that it could increase the total amount of interest paid over the life of the loan.

Generally, a higher credit score will mean you qualify for a better interest rate. But don’t worry if your credit score isn’t perfect—MCU is here to help!

Refinancing may cause a temporary dip in your credit score due to the credit inquiry. However, your score could quickly rebound if you start making timely and regular payments on your new loan. Over time, refinancing could even improve your score if it lowers your debt-to-income ratio or makes your payments more manageable.

There’s no hard and fast rule about when to refinance an auto loan, but you might consider refinancing if:

• Your credit score has increased.
• Car loan interest rates have decreased.
• You didn’t shop around for the lowest auto loan rate initially.
• You feel like your monthly payment is too high.

No, you don’t need a down payment to refinance a car. Refinancing works by replacing your existing loan with a new one, so no upfront payment is required.