It looks like you're using an outdated browser.
For a better experience, we recommend switching to a more modern browser like Google Chrome or Microsoft Edge. Learn more.
Online Banking Login

News & Tips

Is it a Good Idea to Refinance Your Car Loan?

November 18, 2021 by Space Coast Credit Union



From lowering the interest rate to shortening the term, people refinance their car loans for a variety of reasons, especially if their situation has changed. Plus, in many cases, people save more money in the long run after refinancing and end up with a better monthly payment. However, many other factors play a part in determining if it’s a good idea to refinance your car loan. To answer this, it’s important to be clear about your goals—and then you can weigh the pros, cons, and timing of a refinance loan to decide if it’s right for you and your current financial situation.

If you already know that you want to refinance your car and would like to take advantage of SCCU’s low refinance rates, then you can apply quickly and easily online
 

Refinancing Auto Loans: An Overview

If you currently have an auto loan and would like to replace it with one that has better terms or a lower interest rate—that’s what it means to refinance an auto loan. Refinancing involves applying for a new loan, and if accepted, closing the old loan. It’s typically a quicker process than starting from scratch. You can refinance with the lender that holds your current loan or with a different one.

Before we get to the potential benefits, here’s a more detailed explanation of what it means to refinance your auto loan
 

Benefits of Refinancing

Some of the most common reasons that people refinance auto loans include:
 
  • Lowering the interest rate and/or the monthly payment
  • Getting cash
  • Buying a leased car
  • Switching lenders
 

#1: Lowering Your Interest Rate

Usually, people want to refinance car loans when interest rates have dropped—or, because they’ve improved their credit scores, and therefore, can now get a lower interest rate. Any time that you reduce the interest rate you’re paying and don’t extend the repayment period, you tend to save money over the life of the loan. Plus, the payment may go down (depending on the term of the new loan).

Let’s say that a car loan was originally taken out under the following scenario:
 
  • Price: $35,000
  • Down payment in cash: $0
  • Trade-in value of old car: $5,000
  • Loan amount: $30,000
  • Term: 60 months
  • Rate: 5.00%
  • Monthly payment: $566
  • Total paid over the life of the loan: $33,968

A year later, the balance is $24,583 and the person decides to seek a better interest rate and payment. They find a loan program with a 48 month term and an interest rate of 3.25%. Notice how, by refinancing from the original loan program to this one, they aren’t extending their term, instead matching what was remaining on their current loan.
 
  • Loan amount: $24,583
  • Term: 48 months
  • Rate: 3.25%
  • Monthly payment: $547 ($19 lower than the one above)
  • Total paid over the life of the loan: $26,248.67
  • Total savings over the life of the loan: $912

If the lender’s fees to refinance your car loan is less than this amount (or there are no fees, like at SCCU), then it may make sense to refinance. 

If you wanted to reduce the amount of interest paid back over the life of the loan, here’s what the scenario would look like if the vehicle was refinanced for 36 months. The payment would be $718. That may be more than what a monthly budget could contain. If it’s doable, though, here’s a comparison of what would be paid back under these two refinancing scenarios:
 
  • Loan amount: $24,583
  • Term: 36 months
  • Rate: 3.25%
  • Monthly payment: $718
  • Total paid over the life of the loan: $25,848 ($408 less than the 48 month term)
  • Total savings over the life of the loan: $1,320 (compared to original 60 month loan)

These examples aren’t designed to suggest that you should be able to afford car payments of more than $700. It’s to demonstrate how it can make sense to weigh what impact car loan refinancing may have on your monthly budget as well as the amount paid back over the loan’s life—with the goal being to find the sweet spot that fits your own financial situation. If a certain interest and term provides worthwhile benefits, then this may be the right time for you to refinance.
 

Auto Loan Refinance Interest Rates

Effective Date: December 01, 2021
Apply Now
Payment Period Refinance APR* "As Low As" Minimum Loan Amount Payment per $1,000
Up to 36 Months 1.89% No minimum loan amount $28.59
Up to 48 Months 3.24% No minimum loan amount $22.24
Up to 60 Months 3.24% $10,000 $18.08
Up to 66 Months 3.39% $10,000 $16.63
Up to 72 Months 3.54% $12,000 $15.44
Up to 75 Months 4.09% $15,000 $15.13
Up to 78 Months 4.39% $20,000 $14.76
Up to 84 Months 4.79% $25,000 $14.04
Rates shown are fixed Annual Percentage Rates for vehicle model years 2021 and newer. Rates are subject to change. Your actual rate and terms are affected by your creditworthiness, term selected, vehicle type, and model year. Rates only apply to refinances of non-SCCU auto loans. You may be asked to furnish a down payment. Florida loans are subject to Documentary Stamp Tax. The tax amount is not included in the quoted APR. Certain restrictions apply. 


With a lower rate, see what your new auto payment could be at SCCU! 



#2: Getting Cash

If you need cash—perhaps to put towards wedding expenses, college tuition, or to fund a vacation—and your vehicle has equity, then refinancing can be an avenue to explore. Here’s an example:
 
  • Value of your vehicle: $25,000
  • Current loan balance: $15,000
  • Loan to value (LTV) allowed by your lender: 80%

To find out if it makes sense to apply for a refinance, calculate the amount your lender will lend, based on their LTV allowance ($25,000 x 80% = $20,000). The amount of $20,000 would first be used to pay off the current loan with the rest available for your other uses ($20,000-$15,000 = $5,000). If the amount that you would receive helps solve your needs for cash, then it usually makes sense to refinance. Keep in mind that you’re going to increase the overall number of payments on an auto loan and pay more interest in the end. However, this might be better than using a credit card or taking out a personal loan. Check to see what rate and fees a lender charges to verify that it’s a good route to take.
 

#3: Buying a Leased Car

Some people lease a car rather than buying one. At the end of the lease term (typically 24-48 months), most agreements allow the lessee (person leasing the vehicle) to buy the vehicle instead of turning it in. Because leasing is considered the initial financing of the vehicle, people who buy their leased vehicles are actually refinancing. 

The lease agreement will list a residual value, which is the estimated value of the vehicle at lease end—and also the amount that would need to be refinanced. In general, refinancing a leased car follows the same process as refinancing a car loan although the title would be transferred into your name, and, until the loan is paid off, include the name of the financial institution. 
 

#4: Switching Lenders

Sometimes, people refinance auto loans because they aren’t satisfied with their current lender, or it's no longer convenient to have them as their financial institution. In that case, refinancing car loans from the previous bank or credit union to the new one accomplishes that goal.
 

Issues to Consider

Issues that can make refinancing more challenging include:
 
  • If someone has credit problems, lenders may decline to refinance or charge a higher interest rate. 
  • If the current lender charges a prepayment penalty, make sure to factor that in when deciding if it’s a good idea to refinance. The fee may make it less beneficial.
  • If the loan is “upside down,” meaning the current loan balance is greater than the vehicle’s value, this can make it more difficult to refinance. 
  • If you recently bought the vehicle and didn't make a large down payment, there may not be enough equity yet to refinance.

Remember, any time you put up a vehicle as collateral for a loan, it can be repossessed if payments aren’t made. This is especially important to consider if you’re refinancing to get cash on a vehicle that currently has no loan. 
 

Comparing Lenders and Their Loan Programs

When shopping for refinance auto loans, borrowers should get information about the interest rates and terms that lenders would change. Also, compare annual percentage rates (APRs). This is a metric that allows you to make more exact comparisons among lenders because it factors in both the interest rate and the fees charged by a particular financial institution. 

The APR represents the true cost of borrowing. If there is a significant gap between the interest rate and APR of a specific loan, this indicates that fees are higher. Note: the APR also factors in interest that accumulates before the first payment is due.

Look at the fees charged by each lender and check to see if they charge a prepayment penalty. 
 

Benefits of Refinancing Cars at a Credit Union

Credit unions are a special type of financial institution that are not-for-profit financial cooperatives created for and owned by its members (not by stockholders). This typically means that interest rates and fees are lower than loan programs at banks. Because the goal of a credit union is to enhance the financial wellness of members, lower loan rates and fees usually accompany higher rates on savings accounts and certificates of deposit.  

Additional benefits of joining a credit union include:
 
  • You can may have a better chance of getting your loan application approved because credit unions take a more holistic approach with requirements and aim to work with members. 
  • You receive more personalized service. 
  • You can typically obtain financial education that’s designed to help you meet goals.
  • You’re part of a community, either in a geo-targeted way or because of a professional niche.
 

Refinance Car Loans at SCCU

Mission Statement: To Create Value in Cooperative Ownership
To put our mission statement into practice, we return profits to our members through better interest rates and lower fees, exceptional member service, and enhanced services. 

Founded in 1951 as Patrick Air Force Base Credit Union, SCCU began with 28 members and $372 in assets. Today, we’re Florida’s third largest credit union with more than 500,000 members in 29 counties; 63 branch locations on the east coast of Florida from Flagler to Miami-Dade counties; and more than $6 billion in assets. 

Benefits of choosing SCCU to refinance your car:
 
  • Low rates8
  • Flexible terms up to 84 months9
  • No application fees
  • No prepayment penalties
  • Fast approval decisions
  • Simple electronic closing
  • Automatic online bill pay
  • Excellent member service
  • Free online and mobile banking
Plus, it’s possible that you won’t have to make a payment for up to 120 days11

Any questions? Feel free to get in touch with us, and a Team Member will be happy to assist you. 
 
Was this helpful?
Is it a Good Idea to Refinance Your Car Loan?
November 18, 2021 by Space Coast Credit Union
In many cases, people save more money in the long run after refinancing and end up with a better monthly auto loan payment. However, many other factors play a part in determining if it’s a good idea to refinance your car loan.
Tips for Applying for a Used Car Loan
October 26, 2021 by Space Coast Credit Union
Buying a used car offers a variety of benefits from saving more money to stressing less about depreciation. Nowadays, you can get a detailed history of the used car, so you have a better idea of what you’re buying. Plus, more information is available online about the reliability of a car’s make and model. While some may find used car financing to be daunting, more and more lenders make it easier than ever. Once you’ve decided to purchase a used car, here are seven steps you can take to streamline the process and help you get the best deal.
The Florida Financing Guide to Boat Loans
October 5, 2021 by Space Coast Credit Union
If you dream of enjoying the Florida waterways in a sailboat, powerboat, motorboat, cabin cruiser, or other boat type of choice, here’s what you should know about financing and the boat loan process. Fortunately, the purchase process is easier than you might think. We’ll take you through the entire process to help you find the best boat loan for you. 
How to Refinance a Car (+ When to Do It)
September 2, 2021 by Space Coast Credit Union
Refinancing a car involves replacing the current loan on your vehicle with a new loan that typically has more agreeable terms. This can take place with your current lender or with a different one. To help you navigate this process, we’re sharing the pros and cons of refinancing a vehicle, the steps involved in refinancing, and when it makes sense to do so.
Is it better to buy a used or new car?
August 20, 2021 by Jodie Kinley-Smith & Duane Daski
We’re in a strange economic time right now with many dealers having an extreme shortage of inventory due to a chip shortage. Chips, or semiconductors, play an essential role in managing vehicles’ safety devices, engine functions, and more. Because of the pandemic, U.S. automakers had to close factories to slow the spread of the virus and cancelled chip orders, expecting fewer people to buy. 
What are Common Car Loan Terms?
August 5, 2021 by Space Coast Credit Union
Do you feel like your brain’s dissolving into Jell-O as you’re exploring car loan repayment periods? It can feel overwhelming as you’re weighing the pros and cons between short-term and long-term loans. Common car loan terms usually range between 24 and 84 months—but which one is right for you?
The Essential Guide to Car Loans: Everything You Need to Know
May 21, 2021 by Space Coast Credit Union
To get the best car loan at the best rate, make sure you understand the car loan process. Read our guide to auto loans, refinancing, and more.
Car Loans Tips & Tricks
May 21, 2021 by Space Coast Credit Union
Discover four car loan tips and tricks to help navigate the car buying experience. These are important whether you’re buying new or used vehicles.
How to Make Your Loan Payment
April 1, 2021 by Space Coast Credit Union
SCCU’s loan payment process is designed to be as quick and convenient as possible, saving you two of the things you care about most – time and money.
Auto Loan Refinance: Is Now the Right Time?
May 8, 2020 by Space Coast Credit Union
There are multiple reasons choosing a credit union makes good sense when it's time to refinance.
SCCU’s Five-Minute Guide to Buying a Boat
March 12, 2020 by Gary Prager
Summer is here and there’s no better time to enjoy Florida’s great outdoors.
Tips on Buying a Used Luxury Car
September 26, 2019 by Jodie Kinley-Smith
In today’s world, many pre-owned cars are in excellent shape with low miles, especially in the luxury market.
Tips for Buying Your New Car
May 10, 2018 by Jodie Kinley-Smith
As with any major purchase, it is always a good idea to do your homework to know what you can afford. 
The Benefits of Auto Loan Pre-Approvals
December 14, 2017 by Space Coast Credit Union
Ever gone car shopping and fallen in love with a certain vehicle, only to discover you couldn’t afford the payments?
New Car Purchase? December is an Ideal Month to Buy
December 8, 2017 by Space Coast Credit Union
In fact, it's one of the best times. Here's why.
Auto Loan Refinance and Why Not to Procrastinate
October 5, 2017 by Space Coast Credit Union
We look forward to serving you and saving you money!
More Car Loan Questions and Answers
August 25, 2017 by Space Coast Credit Union
Find frequently asked car loan questions and answers, and contact us with additional questions!
How Much Can I Borrow for a Car Loan?
July 14, 2017 by Space Coast Credit Union
If it's time to shop for a new vehicle, you're probably wondering how much you can borrow for a car loan.
Pros and Cons of Refinance: Auto Loans
June 27, 2017 by Space Coast Credit Union
If you're considering refinancing a car, learn more about the advantages and disadvantages first.
Top 10 Most Reliable Cars
June 27, 2017 by Space Coast Credit Union
Reliability plays a crucial role in purchasing new car. What are the most reliable cars on the market today?
Frequently Asked Car Loan Questions
June 16, 2017 by Space Coast Credit Union
Have auto loan questions? We have answers!
What is Auto Loan GAP Insurance?
June 1, 2017 by Space Coast Credit Union
Find out what auto loan GAP insurance is, along with when and why it can be a real life saver.
SCCU’s Five-Minute Guide to Buying an RV
May 11, 2017 by Space Coast Credit Union
There’s a lot to know before you set foot on a lot. The more you research now, the better things will go.
Leasing Vs. Buying a Car
February 8, 2017 by Space Coast Credit Union
The decision to lease or buy a car is a personal one. Don't let the dealer make it for you.
7 Things to Do Before Your Next Road Trip
July 1, 2016 by Tim Alexander
One of life’s greatest pleasures can be a summer road trip to your favorite vacation destination.
Is it a Good Idea to Refinance Your Car Loan?
November 18, 2021 by Space Coast Credit Union
In many cases, people save more money in the long run after refinancing and end up with a better monthly auto loan payment. However, many other factors play a part in determining if it’s a good idea to refinance your car loan.
Tips for Applying for a Used Car Loan
October 26, 2021 by Space Coast Credit Union
Buying a used car offers a variety of benefits from saving more money to stressing less about depreciation. Nowadays, you can get a detailed history of the used car, so you have a better idea of what you’re buying. Plus, more information is available online about the reliability of a car’s make and model. While some may find used car financing to be daunting, more and more lenders make it easier than ever. Once you’ve decided to purchase a used car, here are seven steps you can take to streamline the process and help you get the best deal.
The Florida Financing Guide to Boat Loans
October 5, 2021 by Space Coast Credit Union
If you dream of enjoying the Florida waterways in a sailboat, powerboat, motorboat, cabin cruiser, or other boat type of choice, here’s what you should know about financing and the boat loan process. Fortunately, the purchase process is easier than you might think. We’ll take you through the entire process to help you find the best boat loan for you. 
How to Refinance a Car (+ When to Do It)
September 2, 2021 by Space Coast Credit Union
Refinancing a car involves replacing the current loan on your vehicle with a new loan that typically has more agreeable terms. This can take place with your current lender or with a different one. To help you navigate this process, we’re sharing the pros and cons of refinancing a vehicle, the steps involved in refinancing, and when it makes sense to do so.
Is it better to buy a used or new car?
August 20, 2021 by Jodie Kinley-Smith & Duane Daski
We’re in a strange economic time right now with many dealers having an extreme shortage of inventory due to a chip shortage. Chips, or semiconductors, play an essential role in managing vehicles’ safety devices, engine functions, and more. Because of the pandemic, U.S. automakers had to close factories to slow the spread of the virus and cancelled chip orders, expecting fewer people to buy. 
What are Common Car Loan Terms?
August 5, 2021 by Space Coast Credit Union
Do you feel like your brain’s dissolving into Jell-O as you’re exploring car loan repayment periods? It can feel overwhelming as you’re weighing the pros and cons between short-term and long-term loans. Common car loan terms usually range between 24 and 84 months—but which one is right for you?
The Essential Guide to Car Loans: Everything You Need to Know
May 21, 2021 by Space Coast Credit Union
To get the best car loan at the best rate, make sure you understand the car loan process. Read our guide to auto loans, refinancing, and more.
Car Loans Tips & Tricks
May 21, 2021 by Space Coast Credit Union
Discover four car loan tips and tricks to help navigate the car buying experience. These are important whether you’re buying new or used vehicles.
How to Make Your Loan Payment
April 1, 2021 by Space Coast Credit Union
SCCU’s loan payment process is designed to be as quick and convenient as possible, saving you two of the things you care about most – time and money.
Auto Loan Refinance: Is Now the Right Time?
May 8, 2020 by Space Coast Credit Union
There are multiple reasons choosing a credit union makes good sense when it's time to refinance.
SCCU’s Five-Minute Guide to Buying a Boat
March 12, 2020 by Gary Prager
Summer is here and there’s no better time to enjoy Florida’s great outdoors.
Tips on Buying a Used Luxury Car
September 26, 2019 by Jodie Kinley-Smith
In today’s world, many pre-owned cars are in excellent shape with low miles, especially in the luxury market.
Tips for Buying Your New Car
May 10, 2018 by Jodie Kinley-Smith
As with any major purchase, it is always a good idea to do your homework to know what you can afford. 
The Benefits of Auto Loan Pre-Approvals
December 14, 2017 by Space Coast Credit Union
Ever gone car shopping and fallen in love with a certain vehicle, only to discover you couldn’t afford the payments?
New Car Purchase? December is an Ideal Month to Buy
December 8, 2017 by Space Coast Credit Union
In fact, it's one of the best times. Here's why.
Auto Loan Refinance and Why Not to Procrastinate
October 5, 2017 by Space Coast Credit Union
We look forward to serving you and saving you money!
More Car Loan Questions and Answers
August 25, 2017 by Space Coast Credit Union
Find frequently asked car loan questions and answers, and contact us with additional questions!
How Much Can I Borrow for a Car Loan?
July 14, 2017 by Space Coast Credit Union
If it's time to shop for a new vehicle, you're probably wondering how much you can borrow for a car loan.
Pros and Cons of Refinance: Auto Loans
June 27, 2017 by Space Coast Credit Union
If you're considering refinancing a car, learn more about the advantages and disadvantages first.
Top 10 Most Reliable Cars
June 27, 2017 by Space Coast Credit Union
Reliability plays a crucial role in purchasing new car. What are the most reliable cars on the market today?
Frequently Asked Car Loan Questions
June 16, 2017 by Space Coast Credit Union
Have auto loan questions? We have answers!
What is Auto Loan GAP Insurance?
June 1, 2017 by Space Coast Credit Union
Find out what auto loan GAP insurance is, along with when and why it can be a real life saver.
SCCU’s Five-Minute Guide to Buying an RV
May 11, 2017 by Space Coast Credit Union
There’s a lot to know before you set foot on a lot. The more you research now, the better things will go.
Leasing Vs. Buying a Car
February 8, 2017 by Space Coast Credit Union
The decision to lease or buy a car is a personal one. Don't let the dealer make it for you.
7 Things to Do Before Your Next Road Trip
July 1, 2016 by Tim Alexander
One of life’s greatest pleasures can be a summer road trip to your favorite vacation destination.