The freedom that comes with owning your own vehicle is priceless. Unfortunately, cars can also result in their fair share of monthly and miscellaneous costs—especially the older they get. Luckily, refinancing an auto loan can lead to lower interest rates, lower monthly payments, and give your credit score a healthy boost
When’s the Right Time to Consider Refinancing an Auto Loan?
According to Forbes, Americans are borrowing more than ever for vehicles and spreading out the payments as long as possible. The average loan amount is also climbing (up from $34,682 in Q3 2020 to $37,280 in Q3 of 2021), resulting in heftier monthly payments. If this sounds familiar, one option to reduce your costs might be refinancing an auto loan with a trusted institution like DEXSTA.
Consider refinancing if:
- Interest rates have dropped significantly since you financed
- You need a lower monthly payment
- Your credit score has improved dramatically (i.e., “fair” to “excellent”)
- You want/need to pay your car off faster
Benefits of Refinancing an Auto Loan
The same reasons to consider refinancing an auto loan are also the main benefits, so let’s dive into each further.
Lower interest rates
Interest rates generally ebb and flow so watching the market and paying attention to what’s offered can help significantly. Even lowering by one percent can result in enough saved interest over the life of the loan to make it worth it.
Lower monthly payment
Refinancing at a better interest rate can reduce your monthly payments, freeing you up financially. But, keep in mind this often entails extending the term of your loan. The downside to this is the more time you pay back your loan, the more you spend on interest.
Free up your credit
If your credit score has drastically increased since you first applied for your loan, and you need to free up your credit for another big-ticket item like a house, refinancing can help. Data shows that those with credit scores of 300 to 500 paid an average APR of 12.99%, and those from 501 to 600 paid an average of 9.92%. Whereas those from 601 to 850 paid APRs ranging from 6.32% to 2.58%.
Pay off your car faster
A lower monthly payment is nice, but no monthly auto payment at all? Incredible. If your financial situation has improved significantly since you first got your auto loan, refinancing to a shorter-term and lower interest rate could help move up that payoff date.
How To Refinance An Auto Loan
We’ll start with this advice: do your research. The market is constantly changing and it’s worthwhile to dig deep into what different companies offer and what your financial situation looks like. Be realistic and set goals for yourself that feel obtainable.
At DEXSTA, we provide auto loans for purchasing new and offer our members refinancing options. Not only do we finance up to 100 percent of the retail value, but we can also cover taxes, tags, and service contracts for both new and used vehicles. Once you have a clear picture of your financial situation and your payment goals, we can get you set up.
Experience The Benefits of DEXSTA’S Auto Loans
As much as we might have a love-hate relationship with our cars, we know they can get us where we need to be. Refinancing an auto loan can help you free up financial resources and credit and get you to that payoff date sooner—music to our road trip loving ears!
To refinance your auto loan with DEXTA, contact us by phone or stop into a local branch and one of our loan offers will get you on your way to savings.