Financial Advice

Buy & Own a Car

TOPICS

You Might Want to Refinance Your Car If…

When your car loan payment date comes around each month, do you find yourself wishing you could break up with your lender? The fact is that the need to buy a new car doesn’t always happen at the most opportune times, or on the best terms. Just because you committed to the dealer’s “best loan offer” at the time doesn’t mean you have to stay committed for the duration.

Refinancing your vehicle could reduce your monthly payment and save you money. Are you a good candidate? You might want to consider refinancing your vehicle if...

Call us at (512) 498-CARS (2277), (800) 252-8311, or stop by any financial center to learn more.

You Can Get a Better Interest Rate
If you’ve had your car for a while, you might be paying a higher interest rate than you have to. And if you financed directly through a dealership, there’s a good chance your rate included lender commissions that kept you from getting the best deal.

If you have an opportunity to lower your interest rate, it is a good idea to take it sooner rather than later. Don’t forget your auto loan payments are amortized over time, with the earlier payments comprised mostly of interest costs. Getting your interest rate down as soon as possible saves you money in the form of interest paid and lowers your monthly payments.

Your Credit Score Has Improved
Your credit score has a significant impact on your auto loan interest rate. A poor score or no score can cost you as much as four times the interest rate available with an excellent credit score. Remember, every point saved helps to lower your monthly payment.

If you’ve been making your payments regularly and on time, your credit score may have improved enough to earn you a lower interest rate. Check with your lender to find out how your credit score translates to Annual Percentage Rate (APR).

You Want to Lower Your Payment
If high monthly payments are stretching your budget, refinancing for a longer term (and at a better interest rate) can lower your payments. But before extending the loan term, consider the age and expected value of your car at the time you would pay it off. Carfax estimates that new cars lose about 20% of their value in the first year, and 15 to 25% in each of the next four years.

Also, consider how long you plan to keep the car. A longer-term loan can potentially put you “upside down” – meaning you could owe more on the car than it is worth when you are ready to sell or trade it in. The best time to refinance is while your car is still relatively new and has equity.