Refinancing your car: 5 things to consider

Are you looking to lighten your financial load? Refinancing your auto loan might be the answer. Not only can it help you lower your monthly payment by securing a better interest rate, but you may also be able to reshape the terms of your loan.* Before you jump in, let’s explore five key factors to help you decide if refinancing your auto loan is right for you.

1. Save money with lower rates 

Interest rates have an impact on any loan. If rates have dropped since you financed your car, refinancing could save you hundreds, even thousands, of dollars over the life of your loan. Lowering your rate doesn’t just reduce your monthly payment, but it can also significantly cut the total interest you pay.

If your current loan rate is higher than what’s available today, refinancing could free up extra cash for your budget. Give our auto refinance calculator a spin to see your potential savings.

2. Adjust your loan term 

Refinancing doesn’t just let you lock in a better interest rate - it also allows you to adjust your loan term and unlock equity. This flexibility can be crucial for meeting your financial goals:

• Looking for lower monthly payments? A longer loan term could reduce your payment amount and improve cash flow.
• Want to pay off your loan faster? Opting for a shorter term may increase your monthly payments, but it can help you save on total interest, shortening the distance between you and financial freedom.
• Need quick access to cash? Consider a cash-out refinance which allows you to borrow against your car’s equity, providing a financial lifeline that can help you cover bills or unexpected expenses.  

3. Understand the costs of refinancing

Refinancing an auto loan is usually a quick and straightforward process, but it’s important to consider a few things before proceeding. Be mindful of fees such as application costs, title transfer charges, or prepayment penalties from your current lender. These costs can vary widely and may sometimes outweigh the benefits of refinancing.

At Solarity Credit Union, we make your journey to refinancing smoother by offering no application fees or prepayment penalties.

4. Check your credit score

Your credit score plays a significant role when determining interest rates and terms you’ll qualify for when refinancing. If your score has improved since you took out your original loan, you may now qualify for a lower rate.

Not sure where you stand? Schedule a free financial consultation with one of our Solarity experts. We can help you assess your options and determine whether refinancing is right for your financial situation.

5. Shop around for your lender

Not all lenders offer the same refinancing terms, so it’s worth comparing your options. Different banks, credit unions and online lenders have unique rates and benefits. Look for a lender that offers competitive rates and provides perks that align with your financial goals.

At Solarity Credit Union, we pride ourselves on going the extra mile for our members. Refinancing with us means you’ll get great rates, no application fees and member perks like Skip-a-Pay. Our exclusive program lets you pause a loan payment when you need some extra breathing room.

Conclusion

Refinancing your car loan can be a powerful tool for shifting gears on your financial journey, but it’s not a one-size-fits-all solution. By carefully considering interest rates, loan terms, fees, credit score and lender options, you can make an informed decision that aligns with your unique financial goals.

If you’re still unsure whether refinancing is right for you, Solarity Credit Union is here to help. Our experts can guide you through the process and ensure that you’re making the best choice for your needs. Call us, visit a branch or explore our refinancing options today to start saving.

*All loans subject to credit approval. Rate, monthly payment, loan terms and cash-out options may vary based on credit history.