If you’re looking for ways to reduce your expenses after the holidays, refinancing your auto loan could be a way to drive down your monthly payment and save money.
MSUFCU Chief Marketing Officer Deidre Davis is here to discuss the benefits of auto loan refinancing.
What are the advantages of refinancing your auto loan?
Working with a financial institution to refinance your auto loan is one way you can save money. Refinancing your auto loan can:
- Lower your interest rate
- Reduce your monthly payment
- Improve your cash flow
As with anything involving money and credit, it is important to understand what refinancing a car loan involves. You should review the interest rate and fees, and consider these factors within the context of your long-term financial plans.
Is there an ideal time to refinance your auto loan?
If your credit score has improved since you first took out the auto loan, you may qualify for a lower interest rate. Also, if you want to establish an emergency fund or refinance other debt at a lower interest rate, you could consider cash-out refinancing of your auto loan. This involves refinancing your current loan into a new one and borrowing an extra amount against the equity in your vehicle.
You also can refinance your auto loan even if you recently purchased the vehicle. In fact, it is often better to refinance early in the life of the loan. This is because most of the interest is paid at the beginning of the loan term, so getting a lower interest rate sooner rather than later saves you money.
If you are able to refinance your auto loan, what are some productive ways to use the extra funds you would have?
One way to use the extra money you will have after refinancing your auto loan is to start an emergency fund. This can be used to help cover unexpected costs, such as car repairs or medical bills.
Having savings set aside in this fund will allow you to use cash on hand instead of adding to your debt if an unplanned expense should occur.
What can MSUFCU do to help?
MSUFCU offers low auto loan refinancing rates and you can get approved in as few as 10 minutes. Other benefits include:
- No application fee
- No prepayment penalties
- Flexible terms up to 84 months
- ReadyLoan Check — A blank check valid up to your preapproved loan amount
With rates as low as 1.99% until February 28, 2021, now could be the perfect time to refinance the loan on your current vehicle.
To learn more and find a branch near you, visit msufcu.org.