When Should You Refinance an Auto Loan?

A family of four sitting in an open trunk smiling.

Posted on January 24, 2023


For many Central Ohians, a vehicle purchase is a big decision, which is why it is important to secure the best auto loan to finance your car. In some cases, you might not always have access to the best loan, or the best rates when you’re originally financing your car, which makes an auto loan refinance a good idea. Below are three reasons to consider refinancing your car loan.

When You Find a Better Deal

Many consumers finance their cars using dealer financing, which is fast and convenient, but the tradeoff is you may not get the best terms (rates and total payments). Regardless of how you financed your vehicle, it is always a good idea to watch the market rates and look for a lower rate that will improve your monthly payment or allow you to pay off your loan faster. Comparing your current interest rate can save you money. A percentage point can make a world of difference for your monthly payment and the total interest you pay over the life of your loan.

When Your Credit Score Has Dramatically Improved

Sometimes you must replace your car at the most inopportune of times. If you financed your car when your credit was less than stellar, chances are your interest rate is above average and your payments and total interest reflect that high interest rate. If your credit score has improved since you secured your auto loan, now would be a good time to reevaluate your auto loan. Finding a lower rate that saves a percent or two can reduce your payment and total cost of your auto loan, and even allow you to pay off the loan faster.

If Your Current Loan Isn’t With Your Preferred Lender

In an age of online banking, it can be helpful to have all your financial products through one financial institution. It just makes your financial life much easier - you won’t have to remember multiple passwords, and you won’t have to log into several different sites to pay your bills. If your auto loan isn’t through your preferred bank or credit union, it might make sense to explore an auto loan refinance to consolidate your banking business. However, you should make sure this is in your best financial interest as well.

KEMBA has Competitive Auto Loan Rates

At KEMBA, our members rely on our credit union for their auto loan needs, because we offer competitive rates on new and used vehicles, easy payment options and flexible repayment periods. If you are considering an auto loan refinance, our KEMBA associates are standing by. To get pre-qualified, contact our local, dedicated associates at 614.235.2395and select Option 2 to start the process. Or, if you’re considering refinancing your original loan, we can help!


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