Should I Refinance my Auto Loan?

While many of us have heard of refinancing a home loan, not as many people may realize you can also refinance an auto loan to help lower monthly payments and save some cash.  Better yet, the out of pocket cost for refinancing an auto loan is usually limited to a small title transfer fee.

Auto loan debt in the United States is the third-largest type of debt after home mortgages and student loans are accounted for. In total, Americans owe —- wait for it — $1.59 trillion in auto loan debt, according to the Federal Reserve Bank of New York. Rising car prices fueled by pandemic shortages and delays helped to pump up vehicle prices and ultimately loan rates in recent years.

Why Refinance an Auto Loan?

Refinancing your auto loan to a lower interest rate is a good way to save some money.  Interest doesn’t serve the borrower so you want to pay as little interest as possible.  However, if lowering your monthly payment is your ultimate goal, refinancing your loan with an extended term is an option. 

How Much Can You Save?

While every situation is different, research conducted shows that those who refinanced loans in the last few years saved an average of more than $1,100 over the life of the loan.

Another report on auto refinancing in the United States shows that one in five adults –19 percent  – who refinanced a car loan had the monthly payment cut by $150 or more. And some 56% of borrowers saved between $50 and $149 on monthly loan payments, according to an analysis of more than 300,000 loans.

What Does That Mean For You? 

To decide if refinancing could be right for you, take a look at your situation. If it has been a year or more since you received a vehicle loan – and if your credit score has improved since then – your chances of qualifying for a lower rate are likely better than before.

Finding the Best Rate

The key with refinancing auto loans is to find a lower interest rate. When that happens, you can pay off the original, more expensive loan with the money you borrow from the new lender. Adventure Credit Union offers low interest rates on loans.  We also offer a variety of rate discounts!  For example, if you finance less than 80% of your vehicle’s value, we will reduce our advertised rate by 1.00% APR.*  You can save another 1.00% APR* if you're financing an electric or hybrid vehicle.  Please call or text us at 800.323.2129 for complete details.

Use an Online Calculator

A good way to explore payment options is to use a loan calculator. For the most accurate results, it’s good to know your credit score, how much you want to borrow and your current interest rate.  Call or text us at 800.323.2129 and we’ll be happy to quote you a new monthly payment.

Written by Jean Chatzky with reporting by Casandra Andrews for the SavvyMoney Blog.  Used with permission and edited by Adventure Credit Union.

*APR = Annual Percentage Rate.  Rate discounts are valid as of 4/1/2024 and are subject to change without notice.  For complete details, please call 800.323.2129.