When you purchase a vehicle — whether it’s brand new or new to you — financing plays a big role. Sometimes, the urgency of needing a car can lead to less-than-ideal loan terms.
The good news? As you make payments, you build equity in your vehicle, and your financial situation can improve over time. That means you may qualify for better rates or terms down the road.
The most important thing to remember: you’re not stuck. In many cases, refinancing your auto loan can help lower your payment, reduce your rate, or better align with your current financial goals.
Why should you refinance your auto loan?
1. Since initially opening a loan, your credit score may have improved, and you could potentially qualify for a better rate.
When you initially signed for your loan, your credit score might not have been the greatest. Did you know that as you make your payments on time, that will help improve your credit score? After a few months of positive credit history, your credit score could be higher, qualifying you for a lower rate.
2. You’re looking for more affordable payment options or want to get paid off sooner.
The terms of your original loan and the resulting payments may not work for you any longer. When you refinance you may either qualify for a better rate or can select a different term. A new term could spread your payments over a longer period, or get you paid off sooner at around the same payment you have now, depending on the rate that you qualify for.
3. The balance has been paid down, and equity can be used to consolidate other debts.
Just like with your home, you can use equity in your car to consolidate and pay down other debts. Smaller unsecured debts, with higher payments, like credit cards, could be rolled into the auto loan resulting in a lower overall monthly payment.
4. If your loan is with Park, you have the convenience of setting up weekly, biweekly or monthly auto payments from your credit union account.
Being able to pick your payment terms is helpful when it comes to planning your budget. If you get paid biweekly, have your payment be automatically transferred when you get paid and it’ll be one less thing you have to remember to do!
If you’re interested in refinancing your auto loan, or have questions about your current loan, please feel free to reach out to us! Now is the perfect time to refinance, with no payments due on your new loan for 90 days. Enjoy your new ride with one less payment due!
