Get New Deal on Your Existing Wheels

If you have a car, chances are you probably also have a hefty monthly payment to go with it. And while that original auto loan may have been your best option at the time of purchase, it may no longer be a beneficial match. In fact, you may be realizing that you now have access to better financial options since you’ve had time to build credit and grow your buying power. It’s also possible that you’re searching for a bit of financial relief in the form of lower monthly expenses. 

Whatever your situation, the truth is this: Very few things remain the same over time, and finances in particular require constant monitoring and care. Right now, might be the perfect time to look into the possible benefits of auto refinancing and how it can help you get the most out of your money. 

Refinancing an Auto Loan* 

Refinancing is simply the process of taking out a new loan with new terms and conditions to pay off the old one. You keep your same car but negotiate a new loan agreement that is more favorable for your current financial situation. The particulars of the loan that you’ll be most interested in changing often depend on what it is you’re trying to accomplish, but there are numerous ways to lower monthly expenses.

1. Know the Terms, Conditions and Status of Your Current Loan. Before shopping for a new loan, be certain that you know the term of the original loan — number of months to payoff, as well as the loan’s interest rate. You’ll also want a payoff figure — the amount the lender calculates you still owe on the vehicle. Be familiar with any fees or penalties your original loan may have included, like early payoff penalties, for example. You’ll also want to be aware of the year, make and model of your car because those factors often affect what type of auto loan you might be eligible for as well as any insurance coverage a lender may require.
2. Lower Your Interest Rate. Financial institutions make money on loans by charging borrowers interest on the money they lend. Each monthly payment includes money that goes toward paying off principal, the original amount borrowed, and money that goes toward interest. If you can lower the rate of interest, you usually can also reduce the total cost of the loan.
   • For example, if you borrow $30,000 for 60 months at 8 percent, you’ll pay around $6,500 in interest. But, if you borrow the same $30,000 at 6.5 percent, interest for the total loan comes in at $5,219, an almost $1,300 difference. Plus, the lower interest rate often also comes with a slightly lower monthly payment.
   • A number of circumstances can be helpful in allowing you to negotiate a lower interest rate. The lending market itself may experience shifts in interest rates. If you’ve been financially responsible, your credit may have improved, meriting a better rate. If your earnings have increased, you may be able to not only lower your interest rate but also shorten the term of what’s left on the loan.
3. Change the Term of the Loan. Generally, the longer the term, the more interest you will pay, and the shorter the term, the less interest you will pay. As we just mentioned, you might be able to get a better interest rate as well as a shortened term. If that isn’t an option and you really need to lower monthly expenses, however, you may need to consider increasing the number of months assigned to the loan’s term. For example, on a $30,000 loan at 7 percent, increasing the term from 36 months to 48 months could reduce the monthly payment by more than $200. Extending the term to 60 months cuts the monthly payment by more than $300. While extending the term may cost more in interest long term, it may give you the breathing space you need to stay within your monthly budget.
4. Change Your Co-Signer Status. Particularly if you are young or had little or poor credit, you may have needed a co-signer for your original loan. If your credit has improved, you may now be eligible for an independent loan without a co-signer at more favorable rates and conditions. Similarly, if you’re struggling, adding a co-signer with strong credit may improve your options. Keep in mind, however, that if you ask someone to co-sign your loan, that co-signer is guaranteeing that if you fail to repay the lender, they will have to repay your loan.
5. Consider Going with a New Lender. Explore your options, and shop around. Different lenders offer varying terms and rates. Another lender may be willing to offer better loan conditions, lower rates, no fees or more favorable terms just to get your business. They may offer promotional rates or incentives for refinancing. Similarly, your original lender may be motivated to keep your business — especially if they realize that you’re seriously considering other lenders.
6. Pay Attention to Fees. Before you sign on to a new refinance loan, be sure to have the potential refinancing lender disclose any fees that may be associated with the refinance loan. You may or may not be able to have origination or other fees waived, but you need to be aware of any additional fees that may affect your bottom line on both your old loan and the potentially new one.
    

Refinance with Benefits at La Capitol 

At La Capitol, we want to earn your trust and your business by providing the services you need on terms you can feel secure about. We offer auto refinancing for both our existing members and potential new credit union members. You can get rates and terms that will be better for your budget, and we’ll even give you up to $100¹ for refinancing with us. We offer rates as low as 6.39 percent for 67-75 months² and terms up to 84 months.

If you’re concerned that you may owe more than your car is worth, we can help with our guaranteed asset protection program or GAP Plus. GAP Plus covers the difference between what you owe on your vehicle versus the value that your insurance company assigns to your vehicle.

For a one-time fee, you can get protection for the life of your loan. It covers vehicles valued up to $100,000 and will pay up to $50,000 in benefits and up to $1,000 of your deductible. It will even give you $1,000 toward a new vehicle as long as you finance your new vehicle purchase through La Cap within six months of your primary insurance paying the claim.

Start Your Refinance Today

We understand the benefits of auto refinancing and are ready to work with you and your budget. If you’d like to know more about how to refinance your auto loan, our auto refinancing program is a great place to start.

Explore our rates and terms online, and let one of our refinancing specialists show you just how much money you can save each month on payments.

Disclosures

* Loan products are available to qualified, creditworthy members. The actual rate for which you qualify will be based on your credit history, loan amount, and the term of your loan.

1. Up to $100 incentive offer is valid for transferred vehicle loans currently with other financial institutions and does not apply to vehicles currently financed through La Capitol Federal Credit Union. Only balances of $8,000 or above qualify for a cash incentive under this offer: $50 for vehicle loans with a balance of $8,000 up to $11,999.99, $75 for vehicle loans with a balance of $12,000 up to $17,999.99 and $100 for loans with a balance of $18,000 or more. Offer valid on 2019 or newer year models.

2. Used Auto Refi Payment Example: A loan amount of $25,000 for 67 months at 7.79% APR has an estimated monthly payment of $461.33. Interest will continue to incur with any deferment of payment(s) during the life of the loan and may result in an increased APR for the statement cycle(s) of the deferred payments. Other restrictions may apply. Contact a La Cap representative for details.