when should you refinance your car?


Happy couple driving together after they refinanced their car.

Are you looking at your monthly Auto Loan statements and wondering how you could be saving more money? Refinancing your vehicle may be a great option for you, but there are a couple of factors to keep in mind when making this decision. Refinancing is ultimately the best choice for you if it will lower your rate, your payment, and save you money down the road. Read on to see if now is the best time to refinance.

when to refinance

You can refinance your vehicle at any point in the life of your loan, even if it’s only been a short period of time since the start of your auto loan. However, some institutions have prepayment penalties or processing fees for refinances. It’s important that you look at your auto loan paperwork to see if this is the case for your loan.

1. if you’re looking to get a better interest rate

To put it simply, the lower the rate on your loan, the better! Interest rates are constantly changing depending on numerous variables. If you bought your vehicle some time ago, the rates may have changed. Or you could potentially find a financial institution that is offering a lower rate than wherever you originally financed your vehicle.

top tip: If you financed your auto loan through a dealership, there's a very good chance you didn’t get the best rate possible. Consider refinancing your loan with your financial institution to take advantage of the best rates and possible discounts!

2. if your credit score has improved substantially

Maybe you purchased your car a while ago and financed it when your credit score wasn’t looking as impressive as it is now. Improving your credit is something to be proud of, as it isn’t the easiest of tasks, so you should definitely reap the benefits of all that hard work. Refinancing your vehicle with a better score may score you a better interest rate and, therefore, potentially save you thousands of dollars over the life of your loan.

top tip: Check your credit score regularly with VantageScore. Read our blog to see why it’s so important to stay on top of your credit score.

3. if you’re not “underwater” on your loan

An underwater or upside-down loan is when you’re paying a higher amount on your vehicle than it's actually worth. So, let’s say your car is worth $15,000, but you still owe $18,000. That would make you $3,000 “underwater.” That’s not a position you want to be in when it comes to refinancing. To another lender, it may seem counter-productive for you to refinance until your head is above water on the loan.

top tip: A vehicle loses value as soon as your drive it off the lot and loses up to 20% or more within the first year on the road. If you’re upside down on your auto loan, it may be best to stick to where you’re at and see if you can make extra payments to pay the loan off faster.

get started today!

If you answered yes to any of the points above, then it’s your turn to save money and potentially shave time off the life of your loan! Thankfully for you, the refinancing process is a breeze with BlueOx Credit Union.

benefits of a BlueOx Auto Loan:

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