Car Loans Rate Do-Overs, Too
While mortgages are getting most of the refinancing attention, don't overlook your car loan. In many cases, it can be smart to refinance a car loan, too.
There are two potential rewards: You can trim monthly payments, and you could reduce the overall cost of the vehicle.
Say you had to finance a car at a point when your credit score was not as good as you’d have liked. If your score has improved by even 50 points, you should explore refinancing the car loan. You may have a better credit score than what your current rate reflects.
Or, if rates are lower now than when you borrowed for your car, refinancing can make sense. Say you’ve been paying on a $35,000 car loan for two years, originally set up as a six-year loan at 8.5% with a $622 monthly payment. If you can refinance the last four years of that loan at even 5.5%, your new monthly payment will be $587, and you’ll pay $1,680 less for the loan overall.
If reducing monthly payment isn’t your objective, accelerate your loan payoff by maintaining the same monthly payment. In this example, you’d cut three months off your loan term and be car-loan free in 45 months.
Factors that will affect your refinance: age and condition of the car, your credit score, other debt obligations, employment stability. Talk to an Eagle Federal Credit Union lender today to assess your refinancing opportunities. You might reduce your debt and increase your cash flow at the same time.