The Good and the Bad of Refinancing Your Car

8/30/2019

Refinancing your car can be a good idea for many reasons. Sometimes, it’s not such a good idea. Arkansas Federal Credit Union can help assess your current auto situation and advise you on whether it’s time to refi, sell or ride it out with your ride.

Refinancing your car is a good idea when you took high-interest dealer financing when you bought it. Dealerships sometimes take advantage of young or first-time buyers who are more focused on the monthly payment than the overall deal and not cognizant of the higher rates hidden within the stretched-out loan.

But the credit union can help. Even if you’ve driven off the lot in your new ride, an auto refi with a lower rate remains possible. You may be able to still qualify for a new-car rate.

Other times it could be wise to consider a refi are when your credit has improved after a rough patch — higher scores mean lower rates, or when you’re looking to lower monthly expenses — an auto refinance with Arkansas Federal often results in lower payments.

Also, consider refinancing to a lower rate and payment but continuing to pay the same each month so you can pay off the note sooner and avoid paying future interest.

So, when is it a good idea to stay the course and not seek out a refi? It’s not such a good idea when you’re upside down — when the amount you owe on your car note is greater than the value of the car, and when your current loan has prepayment penalties that would be greater than what you’d save in interest.

Confusing? It doesn’t have to be. Come let our auto refinance professionals figure out what’s in your best financial interest. No charge, and no obligation.   

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