If you purchased and financed a vehicle within the last year or so, you know it pays to be an informed consumer in today’s challenging car market. But are you aware of the reasons why refinancing an existing auto loan could be a meaningful proposition in today’s environment?

New and used car loan financing rates have downshifted in the past 12 to 24 months, according to reporting by the Federal Reserve. What’s more, auto loan refinancing is also a chance to take your current loan to a financial institution with which you already have a relationship. Here are three things to consider to help figure out if the time is right to make a change:

#1. You have dealer financing

Maybe you initially financed your auto loan through the car dealership where you bought the vehicle because it seemed easier and offered a one-time incentive. Dealer financing typically uses an outside finance company to service your loan. But by checking available options through direct lending — from a credit union, bank or other financial institution — you may be able to secure a much more compelling offer.

Here’s some proof to think about: New car loan rates at finance companies averaged 4.86% at the end of the second quarter of this year, the Federal data shows. But the average new car loan rate offered by credit unions nationwide during that same time frame comes in considerably less, at 2.87%, according to data tracked by the National Credit Union Administration.

The bottom line? Swapping your old loan for a new one with a different lender could lower your car payment or accelerate your payoff.

#2. Your financial situation has improved

Auto refinancing may also make financial sense if your credit score or income has changed since you took out your original loan. Lenders consider several factors to determine the type of auto loan terms they offer you. These commonly include your credit score and debt-to-income ratio, which is measured by dividing monthly income by monthly debt. So, if either of these key borrowing factors has recently improved, you may be able to qualify for a better rate and more favorable terms.

And when you can refinance an auto loan to a lower interest rate, the impact can be remarkable. Even a decrease of two or three percentage points may save meaningful dollars in total interest over the life of the loan — which can bolster your personal finances even more. Here’s a quick example:

• Let’s say your original loan was for $25,000 over 60 months at 5.70%
• So far, you’ve repaid $10,000 at those terms
• By refinancing a new loan amount of $15,000 for 60 months at a current rate of 2.70%, your monthly payment would drop from $479.84 to $267.54
• Moreover, your total savings over the life of the loan would add up to around $1,200

#3. You bought an RV in the last year

It’s a fact: RV ownership is at a record high, with 11.2 million households owning one in 2021, up 62% over 6.9 million in 2001, according to data tracked by the RV Industry Association (RVIA).

If you joined the crowd of first-time RV owners during this time, you might want to re-shop your existing loan terms. Why? RV loan rates are often higher than conventional vehicle rates, and they also tend to have longer terms. And considering that the average amount financed for new and used RVs is $45,368 and $46,822, respectively, capturing any downward trend may help return measurable savings to your budget — whether it’s lower monthly payments or a shorter loan term.

Spectrum Credit Union recognizes that cars aren’t the only vehicles in your life. We offer competitive rates on RVs, trailers, boats, personal watercraft and other vehicles too.

Does refinancing make sense for you?

Most auto lenders have rules on which cars they deem eligible for an auto loan refinance, often based on criteria like age and mileage. But at Chevron FCU, things are done a bit differently — with members’ needs in mind. For example, what most lenders consider “used,” we deem “new.” If your vehicle model year is the current year or within the previous two years, and the mileage doesn’t exceed 30,000, we consider it new! This difference widens your opportunity to take advantage of ultra-competitive loan rates and auto refinancings. Explore auto refinancing options and discover our current rates.