It’s time to consider refinancing your loans.

June 2, 2020
By Drum Creative

Need to reduce your spending? Consider
refinancing your loans.

Let’s be honest… reducing
your monthly expenses isn’t always as easy as it sounds. There are only so many ways to cut back. Sure, you
can switch cable providers or phone plans, use coupons, buy only necessities, but those savings are usually
minimal. You want to save money… a sum of money you can actually see in your
accounts.

One of the
easiest ways to reduce your monthly spending is by refinancing your current loans. After all, your
largest monthly expenses are usually your loans (home loans, auto loans, credit
cards). So why wouldn’t they also be the source of your biggest savings? They
are.

Let’s look at auto loan refinancing.

What is auto loan refinancing?

Refinancing your auto loan may sound complex, but it’s
actually quite the opposite. When you originally purchased your vehicle, you
probably financed it with a loan from the dealership or another financial
institution. By refinancing your loan, you are simply switching it from your
current lender to a new one.

Typically auto loan refinancing is done to save money, but
there are actually several reasons you might consider switching your auto loan
to the credit union.

Why would you choose to refinance?

The most common reason to refinance your auto loan is to
take advantage of better loan rates. If loan rates have decreased since you
originally purchased your vehicle, refinancing gives you the option to take
advantage of the lower rates and pay less interest on your loan. Or, perhaps
your credit score improved, and you qualify for better rates. Both these
options can help you save money each month and over the life of your loan.

For example, imagine your auto loan
balance is $25,000, and your current
rate is 6% APR. With a term of 60 months, lowering your interest rate
by just 2% could save you a significant
amount of money.

Current Auto Loan
Rate = 6%
APR
Monthly Payment = $483.32
Total Interest Paid = $3,999.20

Refinanced Auto Loan
  Rate = 4%
APR
  Monthly Payment = $460.41
  Total Interest Paid = $2,624.78

By refinancing, you could save $22.91
per month and $1,374.42 in interest over the life of the loan.

Other reasons to consider refinancing your auto loan
include:
• Paying off the loan quicker
• Gaining more immediate financial relief

Both these options focus on the term or length of your loan.
By shortening the loan term, you will pay off the loan quicker. Your monthly
payments will be higher, but you will be able to significantly cut down on the
total interest paid over the life of your loan.

In order to gain more immediate financial relief, you may
consider extending the term of your loan. This option helps lower your monthly
payments even more, but should only be considered if you’re having financial
challenges.

When you extend the length of the loan, you risk the loan
amount being more than what the vehicle is worth. This results in negative
equity or being “upside-down” on your loan. Most lenders will not allow this
situation to happen. However, additional temporary options may be available if
you’re experiencing financial hardships.

How refinancing works.

Auto loan refinancing is a simple process. You’ll need to apply and provide your current auto loan paperwork, including the payoff amount, to the
credit union. Once reviewed and approved for the auto loan refinance, the credit
union will pay off the loan with your current lender.

A new loan will be created at the credit union, which will
include your new payment and payment schedule. The entire process takes very
little time and could help you save money each month going forward. Most of the refinance process can be handled without
ever needing to visit a branch.

We’re here to help.

If you’re ready to put more money back in your pocket each
month by refinancing your auto loan, we’re here to help. You can start your application
online, stop by any branch location or give us a call at 800-336-6309.