Does it always make sense to refinance a car loan?

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Image via Benchmark Federal Credit Union.

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Growing up, your parents may have told you to pay cash for a car. But with car loans at incredibly low interest rates right now, it makes sense to finance this way — and refinance your current vehicle. Especially when it frees up money for your emergency fund in these uncertain times.

As we all know, the interest you pay on an auto loan can be very expensive depending on the interest rate. You may also have found that dealer financing doesn’t always get you the best rate. When looking to lower your interest rate, it’s important to shop around and include your local credit union in your search. Remember that the interest rate you qualify for today may be significantly lower than your current rate, resulting in significant savings. You can also shorten your loan term to save even more.

When looking for a low interest rate auto loan refinance, be sure to check out Benchmark FCU. During the month of February, the credit union is in the midst of an auto loan flash sale that features an APR of 0.99% for up to 60 months. This offer is valid for financing or refinancing your vehicle through a dealership or other financial institution with Benchmark FCU.

4 steps to refinance a car loan

1. Shop around with lenders for a better rate or car loan package deal.

2. Use an auto loan calculator to compare rates and see savings. Be sure to take into consideration any hidden fees or costs, as well as prepayment charges. Determine the term that best suits your needs and budget. Here is an example of a car loan comparison:

Amount of the loan APR Term payment Total interest

$35,000 5% 60 months. $660.49 $4,629.59

$35,000 0.99% 60 months. $598.13 $887.83

3. Gather the necessary documentation and information. This includes current loan information, including the repayment amount. You will also need to gather your personal information and identification, as well as proof of income. Finally, you will need your vehicle information, including the Vehicle Identification Number (VIN) and proof of insurance.

4. Apply for auto loan refinance. Many lenders, including Benchmark FCU, will allow you to easily apply online at BenchmarkFCU.org.

Refinancing can be a great way to find an auto loan that better suits your needs. By taking the time to do your research, you could find a rate and term that best suits your budget and save you interest over the term of your loan. It can also help you pay off your debt faster.

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Rebecca Worthington is vice president of community relations at Benchmark Federal Credit Union. The only federal credit union to exclusively serve Chester County, Benchmark FCU ​​has served the community for over 80 years and is known for its extraordinary service to its members. For more information on qualifying for credit unions and protecting your financial well-being, visit BenchmarkFCU.org.

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