Applying for an auto loan is one of the most practical and cost-effective ways to buy a car. Spreading payments over a certain period makes vehicles accessible even for those who can’t fork out the cash to buy one on the spot. However, many owners get a car loan and just hope for the best that they can successfully finish the loan term and own the car eventually.
But did you know that you can refinance your car loan? Refinancing means replacing your loan with a new one with a new interest rate and loan term.
Here are five important advantages of refinancing your auto loan.
- Lower Interest Rates
Whenever you apply for a loan, potential lenders require a lot of information, financial documents, and thorough background checks. One of the most significant financial considerations is your credit score. If your credit score has improved recently, or you got promoted and received an increase in your salary, you may now qualify for a loan with a better, lower interest rate.
It could also be possible that interest rates in the current market have lowered and your lender is still charging you relatively high fees. Buffalo’s credit unions are a great option if you want to refinance and get a lower interest rate. In general, credit unions offer much lower interest rates for their members!
- Lower Monthly Payment
When you apply for a car loan, the first thing that you would consider is if you can afford the monthly payment. If you are after a lower payment amount so you could do more with your extra budget, that’s highly possible if you refinance your car loan. By refinancing your loan, you can ask for an extended loan term; therefore, you will be required to pay lower monthly payments.
- Quick Car Acquisition
Even if you have been driving the car for several years, it will feel different once you pay off your loan and have full ownership of it. If you have a higher income now than when you applied for a loan, you can shorten the loan term so you can proudly drive a car of your own. You could refinance your loan for a shorter period with a lower interest rate.
- Additional Insurance Policies
When you sign for an auto loan, most lenders offer car insurance coverage on the side, which you could have declined, especially if there is an additional charge. However, GAP and MBP policies are worth getting if you are under a car loan agreement. Just to review your knowledge about it, GAP is the insurance that will pay off your remaining debt in case your car gets stolen or damaged beyond repair. MBP, on the other hand, is mechanical breakdown protection. If you see the importance of these policies now, then you may add them back to your loan when you apply for refinancing.
- Easy Loan Management
Some lenders are more approachable at the beginning of the term but are difficult to talk to when you have concerns later on. With credit unions, you can have more convenient payment options through your local credit union banking services. You can also simply visit the branch nearest you to communicate your concerns.
Refinance your auto loan immediately and switch to Good Neighbors Credit Union. We offer low rates, competitive terms, and monthly payments that you can feel confident about. Feel free to check out our rates!