When you initially start paying your car loan, you might be in a phase of life where your financial situation requires certain loan payment needs. Your credit score might not be in the best shape—maybe you are building credit, have a few dings on your report, or just don't have much credit history yet. As life changes, you might realize it's time to refinance your car loan.
What are some of the reasons that you might consider refinancing your car loan? Check out our top 5 signs it might be time to refinance your car loan. If any of them apply to you, it could be a great time to schedule a consultation with Leaders Credit Union to discuss your next steps in the auto refinancing process.
You’ve been responsible with your credit — paying bills on time, keeping balances low, and building a strong credit history. If your credit score has improved since you first took out your car loan, you may now qualify for a lower interest rate through refinancing. For example, in 2024, improving your credit score from the 600–661 range could lower your auto loan rate by more than 3% on a new car — and nearly 5% on a used one.
As a standard, high credit scores qualify you for a lower rate. A better interest rate could save you hundreds or even thousands over the life of the loan.
Are you watching the rates available for auto loans? Even a slightly lower interest rate on your current loan means overall savings, probably more than you think! Interest rates can fluctuate based on the Federal Reserve’s decisions, the time of the year, and sometimes by the type of vehicle. Back in early 2024, the rates were exceptionally high due to rate hikes. This is especially helpful if you locked in your auto loan during a time when rates were unusually high. If market interest rates have decreased since you first financed your vehicle, refinancing could lock in a better interest rate, even if your credit score hasn’t changed much.
Life doesn’t stand still—and neither do your financial priorities. When you first took out your auto loan, your circumstances and objectives may have looked very different than they do today. Maybe you're now focused on building your savings, paying down high-interest debt, preparing for a major purchase, or even qualifying for a mortgage. Whatever your next financial move may be, your current auto loan might not be supporting that vision.
Refinancing offers the flexibility to reshape your loan around your goals. Want to free up room in your monthly budget? Refinancing to a longer term can reduce your payments and improve your cash flow. Looking to pay off your car faster and save on interest? A shorter term with a lower rate can help you do just that. The bottom line: your auto loan should work for you—not the other way around. Refinancing helps ensure your loan aligns with your evolving financial strategy.
When you first signed your auto loan, you may not have received the most favorable terms—whether due to a lower credit score, limited options at the time, or urgency to secure financing quickly. Refinancing your auto loan gives you the chance to reassess and potentially secure a more competitive rate that better reflects your current creditworthiness and financial goals. It's an opportunity to lower your monthly payment, reduce the total interest you'll pay over time, and align your loan with where you are now financially.
If you’re ready to take a co-signer off the loan, refinancing into your own name is the cleanest way to go
When you first financed your car, you may have needed a co-signer to qualify—perhaps due to limited credit history, income, or a lower credit score. Maybe you co-signed with your parents when you were still in school. Now that your credit or financial situation has improved, you might be ready to take full ownership of the loan.
Refinancing is the simplest way to:
You may not have gotten the best deal when originally signing for your auto loan, so refinancing is a great opportunity to find the most competitive new loan and get up to date with where you are financially. The expert team at Leaders Credit Union is ready to talk you through the process of refinancing your old loan and the numbers that go along with it. Start by applying online and discover if our competitive car loan rates fit your life today!
Have you checked out our Ultimate First-Time Car Buying Checklist? This is a great resource to review and share with friends and family who might be thinking about buying their first vehicle. It is a comprehensive guide that can help you get on the road faster and with confidence.
Leaders Credit Union is federally insured by the NCUA.