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Are you having second thoughts about your auto loan? Financing a new vehicle purchase at the dealership is convenient, but it rarely results in the best terms or rates.If you feel that you’re paying too much for your auto loan or simply would like to explore alternatives, it may be time to look into how to refinance your car loan with a credit union.
What’s Wrong with Dealership Financing?
For many Americans, dealership financing is an integral part of the car shopping experience. While it’s a convenient one-stop process, you should expect to pay more for financing at the dealership.Lenders sometimes partner with car dealers to offer incentive contracts. These lending contracts have a minimum rate, but car dealers can increase it and pocket most of the difference.
Other lending products have a traditional commission structure, which creates an incentive to recommend some lending options over others, even though they may not be the most affordable option.
Why Refinance Car Loan Credit Union?
In 2023, financing rates increased by two percentage points for new car loans compared to 2022. We highly recommend shopping around to offset this significant increase in interest rates.Lower Interest Rates
The national average interest rate for a 60-month new car loan issued by a credit union is 6.40%, compared to 7.21% for traditional banks. There is a similar difference with used car loans, with an average interest rate of 6.35% for credit unions and 7.46% for traditional banks for a 36-month term.These lower interest rates contribute to fewer missed payments and better resilience among credit union members.
Better Loan Terms
Credit unions have a strong local focus. Rather than being treated like a number, you can expect personalized services, including flexible loan terms.A credit union representative may negotiate customized loan terms. For instance, you could save on the cost of financing with a shorter term or extend your auto loan term for lower monthly payments.
We offer this convenient auto loan calculator to research how different loan terms will affect the cost of financing.
Member Benefits
There are other advantages to refinancing your new or used vehicle with a credit union:- Credit unions exist to serve their membership. Instead of generating profit, they aim to redistribute any excess to members, usually through lower fees or better APRs.
- Advisors are on hand to discuss your unique financial needs and recommend the best banking products.
- Like the big banks, most credit unions offer convenient online and mobile banking platforms with features like automated payments.
How to Refinance Your Car Loan
Refinancing an existing car loan for a new or used vehicle is easier than you might think:- Start by assessing your loan. How much are you spending on interest and other fees? How close are you to the end of the loan term?
- Credit unions consider a wide range of factors when reviewing lending applications. Still, having a strong credit score and getting your finances in order can help you secure better terms.
- Gather the necessary documents. You’ll need proof of insurance, your car registration, and the account information from your current lender.
- Get pre-approved and compare your new rate and terms. If you decide to refinance, your credit union will pay off your previous lender.
- Check this convenient guide for transferring your other banking products to a credit union.
Refinance Your Car Loan and Lower the Cost of Auto Financing
As a credit union, we aim to help our members achieve their financial goals, including paying off car loans faster and making car shopping more affordable.If you financed a new or used vehicle at the dealership, we offer a simple pre-approval process to determine how much you could save.
Find out more about our refinancing process to get started, or visit one of our South Florida branches.