Auto Refinancing 101

If your auto loan is taking a serious bite out of your finances, then it may make sense to refinance. Refinancing an auto loan allows you to reset the terms of your loan, often lowering your interest rate and payments. Is refinancing right for you? Here is what you need to know.

What is auto refinancing?

When you refinance your auto loan, you apply for a new loan with different terms than your existing one. Because the new loan is separate from your existing loan, it will have completely different terms and interest rates. You can refinance your loan through your current lender or seek an auto loan from a completely new source. For example, if you get your original loan through the dealership, then you could go to your credit union to refinance your loan.

What are the benefits of refinancing?

Most people who refinance do so to save money. If you have earned a better credit score since you got your original loan, then you may be able to refinance your car at a lower interest rate, which could save you thousands. If your car payment is too high right now, refinancing lowers the payment by extending the life of the loan. Although choosing to extend the repayment period for the loan will cause you to ultimately pay more interest, the lower payment can make a dramatic difference in your monthly budget.

How do I apply for refinancing?

Start by approaching your credit union to discuss your options for loans. The application process is the same as applying for any kind of auto loan. The lender will check your credit score and make you an offer. Check the interest rate and monthly payment on the loan before accepting to ensure that it offers the kind of savings you want.

For the best rate possible on your auto loan in O’Fallon, choose GCS Credit Union. We offer financing with members in mind, so you can count on us for the best rate on the right loan for your needs. Discuss your refinancing options by calling (618) 797-7993 today.

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