Skyla Credit Union Blog

Did you know refinancing your auto loan could save you hundreds, if not thousands, of dollars over time? Imagine having an extra $50 - $100 in your pocket every month—sounds pretty great, right? Refinancing is one way to make that happen, but what exactly is it, and how does it work?

Refinancing your auto loan can be a smart way to save money, but timing is everything. Whether you're looking to lower your monthly payments or secure a better interest rate, knowing when to refinance is key. So, how do you know when the time is right? Let’s break it down so you can make the most informed decision.

When you purchase a car, you might take out a loan to cover the cost. However, as soon as you hit the road, the value of your car starts to depreciate. Now, let's say your car gets stolen or is damaged beyond repair. You file a claim with your primary auto insurance provider, and they cover the car's current market value, which is the amount your car was worth right before the unfortunate incident.

Hold the phone… Are you coming up on your last car payment or recently made your last one?? Congratulations! I know you're ready to say “I officially own my vehicle!”

In your search for cars and considering auto loans, you may be asking, “What are all the costs included in buying a car? How much should I have saved up before financing? What goes into my monthly car payment?”

Buying a car from a private seller can be a scary and nerve-wracking process simply because, as the buyer, you have to do most of the work. Unlike dealerships, the seller won’t offer coverage for the car they’re selling and the sale is final. It's up to you as the buyer to ensure the seller is keeping up his or her end of the deal in selling a trustworthy car.

When applying for an auto loan from a lender (like a bank, credit union, or even a dealership) you're likely to hear about interest. Interest on an auto loan is essentially the extra fee you pay for using the lender's money to buy a car. Luckily, the interest you'll accrue (and eventually owe) on your loan is spread out over the life of your loan, so you're not required to pay the fee back all at once.

Picture this - you're doing some car shopping and just found your perfect one that has your unique style written all over it. The car salesperson approaches and says “Is this the one?! Let’s get you set up so you can drive home in your new car today!” What’s your next move? Are you rushing to submit an auto loan application or are you going to do some research for the best places to get an auto loan?

As an adult, you have a credit report that summarizes how you've handled your credit accounts which are reviewed and scored. Think of it as your credit report is your new report card, and your credit score is your new GPA. A negative inquiry or delinquency on your report can drastically lower your credit score. This can take time to restore which you might think will ultimately put a hold on many parts of your life, like financing a car.