Life changes, and so does your budget. The auto loan that made sense when you purchased your vehicle may not be the best fit for where you are today.

Refinancing can be an opportunity to revisit your loan and explore options that better align with your current financial goals. Whether you're looking to lower your monthly payment or adjust your loan term, a little preparation can help you determine whether refinancing is the right move.

When is it worth reviewing your auto loan?

A good rule of thumb is to review your auto loan whenever your financial situation changes. Even if you've never had trouble making your payment, your loan may no longer support your current financial goals as well as it once did.

It's been several years since you reviewed your loan

Many people finance a vehicle and never think about the loan again. Taking time to review your financing periodically can help you stay informed about your options and ensure your loan still fits your needs.

Your credit has improved

Many borrowers see their credit scores improve after purchasing a vehicle. Consistently paying bills on time, reducing debt, or building a longer credit history can strengthen your credit profile. If your credit is stronger today than when you first financed your vehicle, it may be a good time to evaluate your options.

Your monthly budget has changed

Life circumstances rarely stay the same throughout the life of a vehicle loan. Housing costs, childcare expenses, insurance premiums, and other monthly obligations can increase over time. If your budget feels tighter than it did when you purchased your vehicle, refinancing may be worth exploring.

You're focused on paying off debt faster

For some borrowers, refinancing isn't about lowering a payment. Instead, it may be an opportunity to adjust the loan term in a way that better supports long-term financial goals and debt repayment strategies.

How can auto refinancing help?

Auto refinancing replaces your existing vehicle loan with a new loan that may better align with your current financial situation.

Potential benefits may include:

Lower monthly payments

For many borrowers, refinancing can be an opportunity to reduce monthly payments. A lower payment may help free up room in your budget for other financial priorities.

A different loan term

Refinancing can allow you to adjust your repayment timeline. Some borrowers choose a longer term to lower their monthly payment, while others choose a shorter term to pay off their vehicle sooner.

Financing that better fits your current needs

The financial goals you have today may not be the same goals you had when you purchased your vehicle. Refinancing can provide an opportunity to revisit your financing and determine whether a different loan structure may be a better fit.

It's important to remember that auto refinancing is not a one-size-fits-all solution. The potential benefits depend on factors such as your credit profile, current loan details, vehicle eligibility, and overall financial situation.

What should you do before applying?

Taking a few steps before you apply can help you understand your refinancing options and make the process easier from start to finish.

1. Review your current loan

Start by gathering information about your existing loan, including:

• Current loan balance
• Monthly payment amount
• Remaining loan term
• Interest rate
• Vehicle information

Having these details readily available will make it easier to compare potential refinance options.

2. Check your credit

Your credit profile plays an important role in the refinancing process. Before applying, take time to review your credit report and credit score so you have a clear understanding of where you stand.

3. Define your goal

Before refinancing, identify what you're hoping to accomplish.

Ask yourself:

• Am I looking for a lower monthly payment?
• Do I want more flexibility in my budget?
• Am I trying to pay off my vehicle sooner?
• What monthly payment comfortably fits my current financial situation?

Knowing your goal can help you evaluate available options and determine whether refinancing aligns with your needs.

Explore your options

The free MyCreditScore & More tools in the Credit Union's Digital Banking can help you understand your credit score, get access to your full credit report, set up credit monitoring and alerts, learn ways to improve your score, and see how you may be able to save money on new and existing loans.

Call us, stop by your branch, or schedule a Video Banking Appointment to walk through your options and find the financing that best fits your needs.

Frequently Asked Questions

Will refinancing affect my credit score?

A refinance application may result in a credit inquiry, which can have a temporary impact on your credit score.

How do I know if refinancing is right for me?

The best place to start is by reviewing your current loan, evaluating your financial goals, and understanding your credit profile. If your needs have changed since you originally financed your vehicle, refinancing may be worth exploring. For example, if your credit score has improved, you may be able to save on interest with a lower rate. If you need more room in your budget, refinancing to a longer term may help lower your monthly payments.

How often should I review my auto loan?

It's a good idea to review your loan whenever your financial circumstances change.