There are a number of potential benefits to refinancing your car, truck, motorcycle, RV, or other vehicle. Depending on your situation, refinancing can get you a better interest rate, lower your monthly payments, and/or change the duration of the loan to better suit your needs, lifestyle, and budget.
But how do you go about finding the right lender and getting the best terms possible on your new loan? Continue reading to uncover the advantages of working with a credit union and how refinancing your car can lead to short- and long-term savings.
When to Refinance
If you’ve had a recent change in income and need to reorganize your budget, or if your credit score has gone up significantly since you first took out your auto loan, it may be time to consider refinancing your car in order to take advantage of lower rates and better terms (or terms that are better suited to your current budget).
Because most auto loans are amortizing loans (meaning you pay them off through a series of fixed monthly payments, with interest costs built in and calculated based on your remaining loan balance), you end up paying most of your interest costs early on. This means the sooner you refinance and secure a lower rate, the more money you’ll save.
In nearly all cases, if you’re able to find a new auto loan with a better interest rate, it makes sense to refinance. However, it’s important to keep in mind that there may be other factors at play and you’ll want to do your research before you commit to refinancing. It’s not uncommon for lenders to charge refinancing fees when you pay off your loan earlier than expected. Thankfully, these fees are usually fairly inexpensive.
While rare, some lenders also include a stipulation that requires you to pay off some or even all of the interest along with your principal (this is often the case for precomputed loans, for example). In this case, you’ll need to crunch some numbers to make sure the penalties and fees don’t outweigh the benefits of refinancing.
Another reason people sometimes choose to refinance their car is to extend the life of their loan to lower their monthly payments. While this is sometimes the best option, keep in mind that doing this may increase the total amount you owe on your vehicle.
Why Refinance Through a Credit Union?
When it comes to car loans, the options are nearly endless. Just about every financial institution seems to offer them, and it can become overwhelming if you don’t know what to look for or how to compare terms and lenders.
Unfortunately, many people limit themselves to big banks, which may offer better rates than car dealerships, but still often have high fees, less-than-optimal rates, and a one-size-fits-all approach. In addition to serving their customers, banks are also focused on making a profit, satisfying shareholders, and paying corporate salaries.
Increasingly, borrowers are turning to credit unions for all their lending needs. Here are just a few reasons why:
Better rates and lower fees
Because credit unions are member-owned and not for profit, all surplus money is returned back to the members in the form of lower rates, fewer fees, and better deals.
More personalized service
Credit unions are typically smaller, more community-focused organizations. They work one-on-one with their members to find solutions that work for them and that will help them fulfill their personal needs and financial goals.
Easier approval process
Because of their individualized approach, credit unions are often more forgiving of poor credit and more willing to work with people who may be struggling to afford their current payments or who have unique circumstances or needs.
Refinance Your Car with Valley Credit Union in Salem, Oregon
Refinancing your car doesn’t have to be a stressful or complicated process. At Valley Credit Union, we work one-on-one with our members to understand their personal goals and tailor our products and services to their unique needs. We serve four counties in Oregon: Linn, Marion, Polk, and Yamhill. If you live or work in one of these counties, we would love to have you join the Valley family and save you money on your car!
We will beat your interest rate or lower your payment on any auto loan not currently financed through Valley Credit Union. If we can’t, we’ll pay you $500 in cash, so long as you’ve been a Valley member for at least 90 days.
Visit our Mission Street location in Salem, call us at (503) 364-7999, or contact us online today to get started!