When interest rates are through the roof (anyone remember 16.64% in 1981?), it’s pretty easy to know when to refinance your car. As rates drop, just refinance and you’re on your way to a better budget.
However, when rates hover within a range of a single percent over a long period of time, does it make sense to refinance? We asked our lending experts when the right time to refinance is and why you should. Here’s what they said.
Lower Your Payment and Save Money
“At the end of the day,” said Craig Neu, senior vice president for lending, “if you want a lower payment, then you should refinance. It’s not always the case, but when you refinance, you can stretch out the length of the loan and that will reduce your payment. Anytime you can lower an interest rate, even if just by half a percent, you can save money and create a little more room in your monthly budget.”
So if you’re looking to make that dream car fit your budget and not stretch you too thin, then you should refinance regardless of a substantial decrease in interest rates. But will that refinance ding your credit score?
Does Refinancing Impact My Credit Score?
“While your credit score will take a temporary hit during the application and approval process,” said Jarrett McPike, vice president for lending, “you won’t feel it for long and with solid repayment history, you will see it bounce back in a relatively short period of time.”
Okay, so the decision to refinance isn’t necessarily influenced by flat interest rates and won’t hurt your credit score. Tell us, then, why should someone refinance at all?
Why Should I Refinance?
“You might have been rushed during the buying process and didn’t really go over all the terms of your auto loan at the dealership and realize later when making a payment that you could have done better,” says McPike. “In that case, it’s easy to call us, your local credit union, and speak directly to a lending officer who can better understand your financial situation and find the right loan with the right terms to fit your budget.”
“You might have financed your car with a big bank,” adds Neu, “and when it comes time to service that loan, whether you have a question about loan terms or need to pre-pay or pause a payment, you might not get the customer service you deserve. We are just down the street from you and can answer your questions immediately. A quick phone call to our call center can even solve the vast majority of your concerns.”
Better terms, local service, and a payment that fits your budget. All of those can be the result of an auto refinance loan from DATCU regardless of interest rate. Let’s party like it’s 1981!
