![]() Please note, membership is required to accept a DCU vehicle loan. We offer the same low rates and flexible terms for new or used car, truck, and van loans. If you think an auto loan refinance is right for you, consider exploring the rates and terms available at DCU. Whether your goal is a lower monthly payment or paying off your loan faster at a lower interest rate, looking at the loan details carefully can help you make a smart decision. It’s also important to time your refinance so you don’t miss a payment on your existing loan, which could hurt your credit score or ability to refinance. Meeting with a lending professional or using an online refinancing calculator can help you determine if refinancing your auto loan would work in your favor. ![]() If you’ve looked through the scenarios above and still aren’t sure about refinancing, you still have steps you can take. If your vehicle were to be totaled and you were upside-down on your auto loan, your insurance may not cover the full amount and you’d be stuck paying the difference. Lenders typically avoid refinancing in this situation – and for good reason. Also known as being “upside-down” or “underwater,” it means the amount left on your car loan is more than your car’s value. If your car is older than 7 years or has more than 90,000 to 125,000 miles, some lenders may not refinance your loan. If your current loan has a prepayment or early termination penalty, you should check if the penalty will offset the savings of refinancing to a lower rate. Most of the interest on a car loan is paid during the first half of the loan, so it’s typically better to refinance toward the beginning of the loan term. Here are some signs that refinancing might not be in your best interest: When Refinancing Might Not Make Senseīefore you decide to refinance, you'll want to consider not just the potential benefit, but also potential drawbacks. Avoid a longer loan term that could put you “underwater,” or owing more than the car’s value (learn more below). ![]() It’s important to note that a longer term will stretch the length of the loan, and you will likely pay more in interest in the long run. If your current monthly payment is straining your budget, refinancing to a lower rate and/or a longer term could make your monthly payment more manageable. If your credit score was on the lower side or if you needed a co-signer when you took out your initial auto loan, you may qualify for a better interest rate if your credit score is higher now. If you financed your vehicle with a dealer or bank, you might find better loan rates at a credit union and could save money compared to your current loan. You find lower interest rates than where you originally financed your loan. This can allow you to pay off your loan faster and still save on interest. By reducing your monthly payment obligation, you can choose to pay extra and apply more money to the principal. If you can refinance at a lower rate, your monthly payment could decrease. If interest rates have gone down, it’s a great reason to refinance. Here are a few scenarios in which refinancing might be worth considering: Refinancing your car loan can save you money, but the circumstances need to be right. For example, if you financed a car at a dealership at a higher interest rate than what your financial institution is offering, refinancing your car loan with a new loan at your financial institution could get you a lower interest rate and lower payments. Refinancing an auto loan means you take out a new loan to pay off the balance of the existing loan. If you’re feeling iffy about your car loan and wondering if there’s potential to lower your monthly loan payment, you might want to consider refinancing. ![]() It’s possible you gave more attention to the details of the vehicle you’d be driving rather than the loan you now have. If you bought a car recently, there was likely a lot to think about.
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