Refinancing your existing auto loan can help you enjoy the benefits of a lower car payment. This will enable you to keep more money in your pocket each month. Refinancing your auto loan involves taking a new loan to pay off the balance of your existing auto loan. Begin by looking at your existing loan to answer these four questions.

  1. How much time is remaining on your existing auto loan? While refinancing your existing loan may provide you with a lower car payment, extending the term may increase the amount you pay overall.
  2. What is your current interest rate? If today’s interest rate is lower than your existing rate, it may help you reach your goal of a lower car payment. If it’s the same or higher, it may not be the right time to refinance.
  3. Has your credit score changed since your original car loan? If you’ve made all your car loan payments on time and your credit score has improved, you may qualify for a lower interest rate. If it has gotten lower since your original loan, it’s probably not a good time to refinance. Tap here to learn how to get a free copy of your credit report.
  4. Is your existing loan subject to a prepayment penalty? If so, you’ll need to do the math to see if a lower interest rate outweighs the prepayment penalty.

Refinancing your auto loan 

By answering the questions above, you may have determined that refinancing your auto loan is a good option for a lower car payment. If that’s your objective, begin by shopping for a lower rate auto loan. After all, the less you pay in interest, the lower your monthly payment might be.

Some lenders may offer other special deals, such as Guthrie Community Credit Union’s 1%* cash back auto loan refinance. In addition, they are offering no payment for 60 days.* Those added perks, coupled with competitive auto loan rates, might help you reach your auto loan refinance goals.

When to refinance your auto loan for a lower car payment 

If interest rates have dropped since you took out your original auto loan it might be the right time to refinance. If your financial situation has improved, such as an increase in income, it may also help you get a better rate. Finally, if you are struggling to pay your monthly bills, refinancing to lower your monthly auto loan payment, may help you free up some needed cash.

When to avoid refinancing 

If you’ve already paid off most of your existing auto loan, it may not be the best time to refinance. It all depends on the rate savings and the term. It’s also important to watch for the fees that may be associated with refinancing your auto loan. We mentioned prepayment penalties above, which also need to be figured into the equation. Finally, if your car is older with high mileage or you’re upside down on the original loan, lenders may not want to provide refinancing.

Apply to refinance

Gather your important information, such as personal information, proof of insurance, and pay stubs. You will also need your current loan information, including your current lender, loan number, and your remaining balance. Finally, you will need all of your vehicle information, such as VIN number, make, model and year. If you found the right lender with an interest rate and deal that works for you, you can jump in and apply. If you like the Guthrie Community Credit Union auto loan refinance offer you can apply easily right online. There’s also a handy online auto loan calculator to help you compare rates and view payments.

Tap to read a blog about Guthrie’s Advantage Plus Auto Loan.


* Certain restrictions apply. This special applies to new and used autos only financed with another lender. Approval for financing is subject to current lending guidelines and credit qualifications. The rate you receive is based on your credit score, model year, and term. Membership eligibility is required. One percent (1.00%) cash back up to a maximum of $500. One percent (1.00%) rebate must be reimbursed back to the credit union if the loan is paid off or refinanced for any reason within one (1) year of loan closing. No payments for 60 days. Interest begins to accrue on the date the loan is opened. Credit Union reserves the right to discontinue this special at any time and without notice. Cannot be combined with any other offer. An example of a monthly payment for a fixed-rate auto loan of $10,000 at 2.49% Annual Percentage Rate for 48 months would be approximately $219.