Does Refinancing Make Sense

There are several factors to consider when asking yourself “Should I Refinance My Car Loan?” Refinancing an auto loan means taking out a new car loan to help pay off and replace your original one. With an auto loan refinance, your monthly payments may be lower, and it could help save you money thanks to a lower interest rate. There are a few factors that should be considered when intending to refinance a car loan, including whether your financial situation has changed, your credit score has increased, or interest rates have dropped. If you’re shopping around for interest rates, consider checking out auto refinance rates at a financial institution. Bethpage offers competitive auto loan rates, has a vast network of dealership partners, and can help guide you throughout the auto loan refinancing process.

Is refinancing a car worth it?

Whether or not you should refinance your car is based on your unique situation and what it would mean for your budget. Refinancing a car loan is generally worth it if it allows you to save money in the long run. However, there are both pros and cons to auto loan refinancing that should be considered.

Pros

A potentially lower monthly payment.

You could qualify for a lower interest rate.

You could refinance to a shorter loan term to pay off your car loan sooner.

Cons

Risk of becoming “upside-down” where you owe more money on the balance than the vehicle is worth.

Rising interest rates where you could wind up paying more interest than you would have originally.

Spending more in total costs over the life of the loan due to paid interest, even if the rate is lowered with refinancing.

Tips to keep in mind when refinancing your auto loan.

You may also be asking yourself, “How Do I Refinance a Car Loan?” Bethpage Federal Credit Union has compiled a list of helpful tips when determining when refinancing your auto loan may be right for you.

Check if auto interest rates are lower

If you are paying a high interest rate on your car loan and rates have recently dropped, it’s wise to investigate refinancing your car loan. However, if the interest rates are the same or higher, it’s better to hold off on refinancing and keep an eye out for decreasing rates.

Find out if your credit score has improved

If your credit score has increased since you initially took out the loan, you may qualify for a better interest rate, also lowering the monthly payment even if the term doesn’t extend.

Find out your car’s value

Before reaching out to any lenders, research to find out your car’s loan-to-value (LTV) ratio. Lenders will generally do the same thing to decide your eligibility and loan terms, so it’s best to be one step ahead. You can check your car’s LTV by visiting websites such as Consumer Reports and Kelley Blue Book and entering your vehicle’s make, model, year, and mileage. Once you know how much your vehicle is worth, you can decide if it makes sense to refinance your car loan.

Refinance Car Loan Calculator

Bethpage’s auto loan refinance calculator can help you get an idea of what your monthly payment would be based on your loan amount, your interest rate, and the loan term if you were to refinance your auto loan. For additional help with our auto loan refinance calculator, fill out an application form to contact one of our auto loan specialists.

Can I Refinance My Car Loan with Bad Credit?

According to the FICO® score ranges, if your credit score is between 300 and 579, you are considered to have poor credit. Whether you can refinance a car loan with bad credit will be up to your lender. Different lenders have different requirements, and some lenders are willing to collaborate with borrowers with poor credit, including those who have bankruptcies or repossessions in their credit histories. However, as with many loans, the lower your credit score, the higher the interest rate on your auto loan could be.

How Many Times Can You Refinance a Car Loan?

There’s no set limit for how many times you can refinance a car, however, refinancing your auto loan multiple times can have some negative consequences for your wallet and credit score. Here are some things to keep in mind when it comes to refinancing your car loan more than once:

It can lower your credit score: The lender will need to run a “hard credit” inquiry to approve your application. Hard inquiries usually have a negative impact on credit scores, so refinancing your auto loan many times may drag down your score.

Risk becoming “upside down” in your loan. Refinancing your car loan repeatedly means a longer loan term, which may cause you to owe more than the car is worth.

Paying more in the long run. If you keep refinancing your auto loan, the interest charges are likely to add up to more than what you would have paid on the original loan. There are standard fees for refinancing transactions such as loan origination and processing fees. These costs and the additional interest you may pay if you extend the auto loan term could negate any money you would have saved from refinancing.

Auto Loan Refinancing FAQs

Can I refinance my car loan with Bethpage?
Yes, Bethpage offers car loan refinance options for members.

What do I need to refinance my auto loan through Bethpage?
Depending on the state, the original Title or copy of the Title is usually required when refinancing your auto loan through Bethpage. A payoff letter from your current lender is also required.

Will refinancing my car loan affect my credit score?
Refinancing your car loan will require a “hard credit” inquiry to approve your application. “Hard inquiries” could have a negative impact on credit scores.