How To Refinance Your Car Loan

older woman and man looking at auto refinancing terms on laptop

Refinancing your vehicle loan is a little-used, yet valuable, tool that can help you save money.  If you find yourself in any of these situations or are just curious to see if you could lower monthly payments or shorten your vehicle's loan term, here’s what to do:

  1. Review your current vehicle loan. If the loan is not with Hanscom Federal Credit Union, make sure your loan does not have any prepayment penalties. Check the original loan value, the rate you are paying, the term of your current loan, and the number of payments you’ve made.
  2. Check out our loan rates and compare them with the rate you're paying now.
  3. If you think you can get a better rate with us and save on your monthly payments or shorten your term, fill out our online form or give us a call at 800-656-4328.


Refinance Your Car Loan… And Save!

Refinancing an auto loan can help stretch precious dollars in your budget. It also makes financial sense to pay less interest and put that money toward something constructive – like tucking it away in a retirement account or saving it to put toward the purchase of your next car. However, you might be wondering under what circumstances should you consider a refinance of your car loan. Let’s take a look below.


Is It Worth Refinancing My Car Loan?

When you purchased your car a couple of years ago, chances are your financial life was in a different place than it is today. Maybe you had a few late payments on your credit report that were driving your credit score southward when you got your loan. Or perhaps you’ve changed jobs, sent a child off to college, or have some additional bills you didn’t have back then. 

Here are 4 reasons why refinancing an auto loan could be a smart move for you.


Reason #1: Your financial picture has improved.

When you purchased your car, your credit score – the number that a financial institution uses to determine how creditworthy a borrower is – may have been lower. There are many reasons for this. For example, maybe you purchased your car when you didn’t have much of a credit history or you bought your vehicle during a personal financial crisis that affected your credit score negatively. If you have a couple of years of on-time payments with all of your creditors, your credit score may be significantly higher today, which means you could get a better interest rate on loans.

Of course, there are other factors affecting your financial picture besides your credit score, such as your debt-to-income ratio. But if you’re looking at your loan and wondering if that high-interest rate you’re paying is justified now that you have a better credit history, it is worth contacting Hanscom FCU for a free credit report and score review. We’ll look at your credit report together, show you where you’ve improved, and then let you know how your higher credit score can lower your current interest rate. There’s no obligation, and even if you choose not to refinance, you’ll walk away with some tips to improve your credit standing even more. Contact us at to sign up today.

Reason #2: You need to lower your monthly payment.

A change in employment, an increase in expenses, or simply a desire to have more cash in hand at the end of the month are all reasons why you might want to investigate refinancing your auto loan. Refinancing to a lower rate and/or extending your new loan term can reduce your payment and leave you with additional money in your pocket at the end of the month. Just keep in mind that by extending your loan, you may be paying out more in interest over the life of your automobile. A loan specialist at Hanscom FCU can work through the math with you to determine if this is a smart option for you.

Reason #3: You need cash.

You’ve been paying off some high-interest credit card bills to reduce your debts, and there’s a remaining $2,000 balance on one of them you’d really like to eliminate. If you owe less than what your car is worth, you can refinance your auto loan to get the cash to pay off the credit card. Here’s how it would work:

Let’s say your car is worth $12,000 and you owe $5,000 on it. You could refinance the car for $7,000, pay off the $5,000 loan and have $2,000 left in cash you could use to pay off that bothersome credit card balance. You’ll cut the interest rate down considerably on your credit card debt, and may be able to get a lower rate on the refinance as well. Just keep in mind that automobiles depreciate every year; you’ll want to ensure you don’t refinance to the point that you’re “underwater” on your loan (that is, owe more than the car is actually worth). A Hanscom FCU lending expert can help you determine if a cash-out refinance is a good option for you.

Reason #4: You want to remove a co-borrower from your loan.

When you bought your car, you may have needed someone else’s credit to help you qualify for a loan because you didn’t have enough of a credit history, didn’t have good credit, or your income was too low. This person is called a “co-borrower,” and they are just as responsible for paying on your auto loan as you are. However, if you’ve been making on-time monthly payments for a couple of years or have more income, it may be the right time to refinance and qualify for a loan in your own name only. Other benefits: you may get a better rate on your new loan and your co-borrower will be off the hook for your debt!


What Are the Benefits of Refinancing My Car Loan?

Refinancing your vehicle is quick, easy, and could save you a lot of money each month – and over the life of your loan. To recap, here are some of the benefits you could realize:

  • A lower rate than you're already paying
  • A lower monthly payment
  • A shorter term so you can pay off your loan more quickly
  • No application fee
  • No title transfer fee
  • Optional low-cost payment protection and GAP coverage


Other auto financing opportunities to consider...

In addition to refinancing your current auto loan, if you're looking for flexible, affordable financing on new and used RVs, boats, campers and motorcycles, we can help you there, too.

You can visit us online to learn more about our auto loan refinance options, call our experts at 800-656-4328, or stop in at one of our locations today!

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Hanscom Federal Credit Union
Hanscom Federal Credit Union

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