Refinancing 101: When & Why to Refinance Your Auto Loan

At Missouri Central Credit Union, you aren’t “locked in” to your original auto loan rate. There are several situations where you could save money by refinancing your car loan and free up your hard earned money for other financial needs. 

When Should You Refinance Your Auto Loan? 

Sure, everyone likes the idea of saving money on your auto loan but when does it makes sense to refinance?

The earlier the better: the sooner you can refinance your auto loan, the more money you will save over the lifetime of your loan. Most of your auto loan interest costs are paid at the beginning of your loan. The sooner that rate is payed down; the sooner you will be saving.

After several years have passed, it is likely that refinancing would not be as helpful. You may have a lower interest rate that results in lower monthly payments, but may end up making payments for a longer period of time. 

An amortization table is a great tool to use when evaluating saving money through a refinanced auto loan. The Member Service Representatives at MCCU have the experience, knowledge and tools to determine the best course of action for your refinanced auto loan decision. 

Did You Finance With the Dealer? 

Was your original car loan financed through the dealership? To be eligible for rebates and incentives, car dealerships often require you to finance through them; which allows them to recoup the rebates offered. Yes, it is a sneaky little trick, but we can give you a trick to put up your sleeve. After meeting the loan requirements through the dealer, you can often save money by refinancing your car loan through MCCU.    

Has Your Financial Situation Changed?

A change in your financial situation, for better or worse, is always a good time to check if you can save money through refinancing your auto loan. Did you get a new job or promotion that pays more than your previous position? You may be able to pay more on your auto loan each month reducing the overall interest on the loan.

If a financial set-back should occur, refinancing your auto loan could be a huge life saver. Lower monthly payments will be helpful for when emergency funds are needed or when you experience a drop in income.

Credit Score Improved 

Your improved credit score could bump you to a lower interest rate, saving you money in interest over the duration of your car loan. Not sure if you’re ready to refinance? Talk to a Member Service Representative at MCCU to see if refinancing can save you money. 

Interest Rates Have Dropped 

When interest rates have dropped, you would be wise to explore the possibility of saving your hard earned money through a refinanced auto loan. Lower the interest rate on your car loan, receive lower monthly payments and keep the loan term the same, or even pay it off sooner; now that is a profitable situation to take advantage of!

Not Sure if Refinancing is a Good Option? 

Things to consider with a refinanced auto loan:

  • Have you met the original loan requirement from your car dealer loan?
  • Will fees off-set the savings to be had through a refinanced auto loan? (Missouri Central Credit Union doesn’t charge any refinancing fees, but you’ll want to see if your current financial institution does)
  • Will you be saving or losing money over the life of your refinanced auto loan?

If you are not sure refinancing your auto loan is right for you, if it will truly save you money, talk to a Member Service Representative at Missouri Central Credit Union. We have the experience, tools and knowledge to help guide you through the process. MCCU is here to offer sound financial advice for your auto loan decisions. 


Considering refinancing your auto loan? Contact Missouri Central Credit Union and speak to one of our outstanding representatives at (816) 246-0002 today!