What's New at AmeriChoice?

Auto Loan, Loans

The Best Time to Refinance Your Auto Loan Could Be Now

Alex Resetar | November 13, 2019

Maybe you needed to buy a car quickly and at the time, you didn’t have the time, resources or the credit score to get a great auto loan. If you got a loan directly from the dealership, chances are good that you probably didn’t get the best interest rate. But you don’t have to settle for high interest rates because you had to make a hasty purchase. It may be time to refinance your auto loan so you can save money.

Understanding How Auto Loans Work

Auto lenders, like all loan lenders, make their money off of interest charges. Interest charges are applied to the principal amount of the loan (aka the actual cost of the car) and are added to your monthly charges. If you pay off your loan early, you’ll be paying more of the principal amount faster and therefore you will pay less interest charges. If making larger or additional payments are not an option, refinancing your auto loan sooner rather than later may be a great way to save on your auto loan.

It’s Different Than Refinancing a House

When you refinance your house, you’ll potentially need to pay a fee and you’ll also need to get an appraisal. When refinancing your car, the process works a little differently. Most of your interest charges are paid during the first half of the total loan. In most cases, you can refinance your auto loan after making only one or two payments. Finding an auto loan with a lower interest rate will always save you money. The two most important things to check about your auto loan before your refinance are the following:

  1. Will there be a penalty if you pay off your current loan early?
    • Sometimes car loans require you to have paid off a certain amount of the loan before you can pay it off entirely. Make sure your loan does not have this limitation before you look to refinance.
  2. Are you upside-down in your auto loan?
    • If you owe more on your car than it is worth, you are considered “upside down” in your loan. Especially if you’ve had a recent accident or you feel like the price you bought the car for was too high, check the Kelly Blue Book value on your loan before looking for a loan to refinance.


If these two situations don’t apply to you, researching auto loans may be a great way for you to save money. The sooner you refinance, the more money you will save. For a more in-depth explanation of the reasons why you should or should not refinance your auto-loan, check out our blog here.

Changing Your Interest Rates Will Change How Much You Will Pay Overtime

Although you won’t be able to change your principal payment, finding an auto loan with a lower interest rate than your current auto loan interest rate can lower your monthly payments and how much you will pay in interest over time. Currently, the national average interest rate on a 60-month auto loan is 4.21%. Finding an auto loan from a trusted lender at a low interest rate, such as a credit union like AmeriChoice Federal Credit Union, can save you hundreds of dollars. To find out more information about auto loans from AmeriChoice, click here: https://www.americhoice.org/loans/auto-loans/

Top Reasons to Check if You Qualify for Auto Loan Refinancing

Refinancing your auto loan could be helpful if any of the following applies to you:

  1. You rushed into buying a car without checking for competitive interest rates
  2. Your current interest rate is higher than the national average (4.21%)
  3. Your credit has improved since you bought your car
  4. You’re looking to drop your monthly payments without extending the pay-out time on your loan.


If any of these situations apply to you, do the research. Check out trusted lenders who offer low interest auto loans. Make sure that there is no penalty with your current auto loan for paying your auto loan early. See if you qualify for an auto loan with a lower interest rate. Refinancing your auto loan as soon as possible will save you the most money and will put you in the best financial situation.