Refinancing your auto loan can help you save money on interest and lower your monthly payments. While it’s tempting to refinance at the first sight of better rates, you need to take time to assess various factors – from your credit score to upcoming expenses. Doing so can help you determine the best time to refinance your auto loan.
Let’s explore key considerations that can help you decide when an auto loan refinance is optimal for you.
1. Interest Rates Have Fallen
If interest rates have dropped significantly since you initially took out your auto loan, it may be a good time for you to refinance. Lower interest rates can translate to solid savings over the life of your loan.
Also, monitoring market conditions can play a role in determining the best time to refinance your auto loan. Keep an eye out for lender promotions, incentives, and special refinancing offers. Timing your auto loan refinancing to coincide with such offers can potentially save you more money.
2. Your Credit Score Has Improved
If your credit score has improved since you first obtained your auto loan, you may be in a good position to refinance. A higher credit score can qualify you for more favorable interest rates and loan terms.
If you don’t have a strong credit score right now, start monitoring your credit score more closely and take actions to improve it – as this can impact your ability to secure a better refinancing deal on your auto loan.
3. You Want to Change the Length of Your Loan
If you’re several years into a long-term auto loan, you may want to refinance to a shorter term to pay off the loan sooner. If your current monthly payments are putting a strain on your finances, it might be a good idea to refinance for a longer loan term. This can help lower monthly payments, hopefully making it easier for you to manage them.
4. Your Vehicle’s Equity Has Increased
If the value of your vehicle has increased significantly since you purchased it, you may have equity in the vehicle. Increased equity can be used as a negotiating tool when refinancing, which may enable you to secure better loan terms.
However, it’s important to note that not all lenders consider equity in a vehicle as a factor for refinancing. So, make sure you research lenders who consider vehicle equity if this is a factor you are counting on.
5. You Anticipate Other Large Financial Expenses
If you foresee having large expenses, such as a home purchase or major home renovation, refinancing your auto loan to lower your monthly payments can free up more cash for these upcoming expenses. By reducing your auto loan expenses, you can better manage your overall financial commitments.
Final Thoughts
The best time to refinance an auto loan depends on a variety of factors, including interest rates, change in income, and market conditions. It’s important to evaluate how such factors impact you and determine when the optimal time is to refinance your auto loan. If you time things right, you can potentially save money in the long run.
And if you do choose to refinance, it’s also important to shop around and compare offers so that you can secure the best auto refinance deal for your needs.
Refinance Your Auto Loan with NWCU
If you’ve been thinking about refinancing your auto loan, now’s a great time. Take advantage of better rates and enjoy more flexibility. Whether you want to lower your monthly payments or shorten your auto loan term, we’re here to help. Our team of loan experts will go the extra mile to find the best deal for you.
Get preapproved today! Call us at (800) 452-9515, apply online, or visit your local branch.
*All loans subject to approval. Loan rates will be based on applicant’s credit history and may be higher. Rates and terms are subject to change without notice. Interest accrues during initial 90 day no payment period. For details and additional rates, please contact NWCU at (800) 452-9515.