Are you driving around with a loan on your car, wondering if there's a way to level up your finance game? If so, ITCU has news for you - refinancing your car loan might just be the secret sauce you've been looking for. Let’s break down the process, debunk the myths, and help you decide if refinancing your car loan is worth the effort.
Car Loan Refinancing: What is it?
So, what exactly is car loan refinancing? Think of it as giving your car loan a makeover. When you refinance, you replace your existing car loan with a new one, often with better terms. It's like hitting the reset button on your loan and giving yourself a shot at improving your financial budget, which is what ITCU wants to help you do.
If you’ve previously refinanced your loan, don’t worry - you can do it again. And refinancing is fast and simple.
Evaluating Your Current Car Loan: Know Where You Stand
Before diving into the world of refinancing, you’ll want to take a look at your current car loan details. For added convenience, you may be able to get your loan info right from your phone – depending on the bank, it could be right in the palm of your hand. Log in, click on your loan and check before trying to find the original loan documents.
We outline what you’ll need below.
The Interest Rate
First up, that dreaded interest rate. Is your rate higher than what's currently available in the market? If so, that's a red flag. You might be paying more than you need to. Locate this first!
The Remaining Term
Next, let's talk about the loan term. Are you locked into a longer repayment period that's stretching out your financial commitments? If there's a chance to shorten that term, it's worth considering. This will help you increase the equity you have in your car, faster.
How many payments do you have left on your loan? Figure this out by looking at when your last payment is due (commonly referred to as the maturity date) and compare that month and year to today – the difference in months is your remaining term.
The Monthly Payment
Chances are good you’re familiar with this; it’s the amount that hits your bank account every month. Is it eating up a significant chunk of your budget? If there's an opportunity to reduce that burden, you owe it to yourself to explore it.
Determining If Refinancing Makes Financial Sense: Crunching the Numbers
Now that you have a clear picture of your current loan, it's time to crunch some numbers and determine if refinancing for you is financially savvy.
A quick note - In some cases, a higher rate and shortening the maturity date does not necessarily mean a higher payment. What’s your goal - are you refinancing to save money now or in the long run through total interest paid savings?
Dropping Interest Rates: Hello, Savings!
If interest rates have dropped since you first got your car loan, it's time to pay attention. Lower rates could mean substantial savings over the life of the loan. Picture that extra cash in your pocket - it's a beautiful thing.
Additionally, maybe you got your loan through the dealership…. In which case, you’ll want to be careful as they can pass through higher rates and you may not know because you were purely focused on the monthly payment meeting your budget.
Credit Score Confidence Boost
Has your credit score improved since you secured your original car loan? A higher credit score now is music to lenders' (and your) ears, as it signals your creditworthiness. That can translate into better refinancing terms and, you guessed it, more savings!
Calculating the Savings
Now, let's get down to the nitty-gritty - the potential savings. Calculate the difference in your monthly payment and total interest paid with a refinanced loan. Those numbers can be eye-opening and serve as a solid indicator of whether refinancing is worth it. Again, we can help you assess this, or simply use our calculator to compare those potential costs.
Time to Apply
Alright, you’ve done some research and feel refinancing is right.
Now, it's time to fill out that application. Be sure to provide accurate information, and don't be afraid to ask us any questions along the way. A little communication can go a long way in getting the best refinancing terms. Complete the application and hit the “Submit” button. We’ll be in touch with you in a flash with next steps.
Congratulations! You're now equipped with the knowledge and confidence to decide if refinancing your car loan is worth it, and how to apply.
Remember, it's all about taking control of your financial destiny. Weigh the pros and cons, crunch those numbers, and make a decision that aligns with your financial goals.