Cash in on Low Loan Rates by Refinancing Your Car Loan

When loan rates drop one of the first things that comes to most people’s mind is, “time to refinance”. But, usually they are thinking of their mortgage. Don’t forget about other collateral-based loans, specifically your car loan.

Rates on car loans are currently as low as 2.99% APR. Last year at this time auto loan rates averaged around 6% APR for those with excellent credit. So, right away you can see that refinancing could save you money.

Things to keep in mind if you are considering refinancing:

1) Extending the terms may reduce your monthly payment but is not likely to save you money. Say for example you’ve got a $15,000 auto loan at 12% written for 60 months. Your current payment is $360 each month. The total amount you’ll pay when the loan is finished is $21,622. You’ve just completed the 2nd year of payments, so you’ve already paid 24 payments or $8,640. Your remaining balance is $12,982. You refinance the loan at a lower rate of 8%. This time you’re refinancing the remaining balance of $12,982. If you choose another 60 month loan your monthly payment would be just $263.22—nearly a $100 savings in your monthly budget. That would definitely relieve the strain. But over the life of this loan you’d pay $15,793. Add that to the $8,640 you’ve already paid and you’ve spent $24,433 on a $15,000 car.

2) Refinancing makes sense if: a) you’re credit situation has improved since your loan initiation, and/or b) refinancing would save you money over the long-term of the loan, and/or c)your monthly payments fit within your budget.

3) Refinancing may not make sense if: you tend to trade in your car every 2-3 years.

Member Jan G. recently refinanced her vehicle with Coors Credit Union. In this example, the refinance makes perfect sense.

Here’s what she says, “In May I was stunned to see the CCU offer of refinancing at 2.99%—fully 5% lower than I was paying on the lease. With a little money I had and Coors Credit Union, I was able to buy out the 5 year lease, and now will own my dream car in 3 years, making payments under $300 a month. Coors Credit Union, I love you.”

We love this too. Anytime Coors Credit Union can help a member save money and get exactly what they want and need, it’s not just good, it’s the perfect example of credit union philosophy.

We’d like to save you money too. Come by and let’s talk about it.

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