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Are you unhappy with your current auto loan? Maybe it’s time to consider refinancing.
The principle behind auto loan refinancing is simple: You take on a new loan to pay off the balance on your existing auto loan. If you’re struggling with a high interest rate or an unaffordable monthly payment, refinancing could be the key to finding better, more favorable terms.
Refinancing your auto loan could help lower your monthly payments by lengthening the term of your repayment. Or it could help you save money through a lower interest rate.
You might want to consider refinancing if interest rates have dropped since you took out your current loan or if your credit health has improved.
Dealerships may not offer you the best rates available. If you took out your loan through a dealer — especially without negotiating the interest rate — refinancing could potentially save you thousands of dollars over the remaining life of the loan.
Are you having a difficult time covering your monthly payment?
Refinancing for a longer term can bring down your monthly costs and make balancing your checkbook more manageable.
The answer depends on your individual situation, but let’s say your current loan balance is $20,000 at a 6% interest rate with a five-year (60-month) payoff time frame.
Keep in mind that while lower monthly payments may help you in the short term, a longer-term loan could put you at more financial risk. You may be stuck paying off a large portion of your loan after your car’s value has significantly depreciated.
If your immediate goal is to reduce your monthly expenses, an auto loan refinance could still be a good choice. Consider refinancing now but increasing your monthly payment once your financial situation has improved.
You can always enter your desired loan terms into an online debt repayment calculator to see if refinancing could reduce your monthly payments and how much your total interest cost could decrease.
Refinancing your auto loan means paying off your existing loan early. This could be a problem if your existing loan contract includes a prepayment penalty clause.
Take a look at your contract to see if you’ll be charged fees for early repayment. Before applying for auto refinancing, make sure to crunch the numbers so you can determine whether prepayment fees would cancel out the financial benefit of refinancing.
Your credit scores are a factor in determining your auto loan rate. If your scores have gone up since you bought the car, and you’ve made on-time car payments, you might get a better rate, which could save you money in interest over the life of the loan.
Lenders may use your FICO® Auto Scores or base credit scores to help determine your creditworthiness. But no matter which they use, better credit scores can indicate to lenders that you’re more likely to pay off your loan, so they may give you a lower rate.
Not sure if your scores have improved? On Credit Karma, you can get your free VantageScore 3.0 credit scores from TransUnion and Equifax.
Generally speaking, it’s easier to find a lender who’ll work with you when your car is worth more than your remaining loan balance.
New cars can lose about 20% of their original value within the first year, and an average of 15% to 25% each of the next four years, according to Carfax. So time is of the essence.
Some lenders won’t even consider refinancing an older car. Capital One, for example, only refinances loans for vehicles that are seven years old or newer.
If your car is relatively new and still has equity, now could be a good time to refinance.
Each lender has a variety of requirements. It can be difficult to sort through them all, but Credit Karma can help you narrow down some of the options.
One lender requirement you’ll want to be aware of is mileage.
LendingClub will refinance a personal vehicle with fewer than 120,000 miles. But for some lenders, lower mileage could mean better rates. Navy Federal Credit Union, for example, offers loans with rates as low as 1.79% as of May 2020, but only for vehicles that haven’t logged 7,500 miles or more.
Also, be aware that some lenders may not refinance loans for your vehicle’s make or model. For example, if you drive an Oldsmobile, Daewoo, Saab, Suzuki or Isuzu, you can’t qualify for an auto refinance loan through Capital One.
You may also need to look outside your current lender for a loan. While some lenders, like Bank of America, will refinance an existing loan they’ve given you, other lenders won’t.
If the lender pulls your credit, your loan application will show up on your credit reports as a hard inquiry. While hard inquiries can affect your credit, each one may only knock a few points off your scores. And shopping around may not hurt — depending on the credit-scoring model, any auto loan inquiries that take place within a given time span ranging from 14 to 45 days will count as a single inquiry.
Refinancing your auto loan can help you access new payment options that better fit your needs.
Whether your credit has improved, interest rates have gone down or you’ve found a lender who can offer you better terms, it might be the time to refinance. First, make sure you do the following:
Contact Education First and let us crunch the numbers for you. We might just be able to help you save money. Give us a call us at (614) 221-9376 or email us at firstname.lastname@example.org. We are here to help walk you through the process and answer any questions you have.
Applications for Education First Credit Union’s 2021 scholarship competition are available. Up to five $1,000 scholarships will be awarded. To be eligible, applicants must be a high school senior who will graduate in 2021 and attend an accredited two or four year college or university in the fall of 2021, or a current college student who will be enrolled in an accredited two or four year college or university in the fall of 2021. Applicants must be primary members of Education First Credit Union.
To request an application, stop by one of our offices, call us at 614-221-9376, or email email@example.com or simply click the link below.
Click Here for an application.
Is one of your 2021 goals to get out of debt? GreeenPath can help!
GreenPath offers free credit counseling and debt counseling to help ease your financial stress, address your financial concerns, and develop a plan for living a financially healthy life.
It’s the jolliest time of year again, but everything’s different now. Instead of decking the halls with your family and counting down the days until Christmas together, you’ll be heading home just days before the holidays to spend time with people you haven’t seen in months. What’s it going to be like to go home after so many months away? You’re also living on a tight budget now, and you’re stressing over gifts and travel costs.
How are you going to keep the joy in the holiday season this year? Try these ideas:
Don’t think that the arrival of the holiday season has to mean letting your budget fly out the window.
First, save on airline tickets by clearing your cache before searching for flights to help bring up the best deals. It’s also helpful to book your flight during the week; research shows that airlines tend to offer their lowest prices on Tuesdays.
Next, save on gifts by arranging a Secret Santa swap among your friends. You’ll only have to spring for one gift, and the surprise factor makes the exchange super-fun.
Finally, save on clothing costs by skipping the mall and instead hitting larger bargain stores, like TJ Maxx and Marshalls. Spend some time digging through their selections and you just might hit gold.
We get it; you’ve been waiting for this break through the whole pressure-packed semester. And it’s OK to use the time to indulge in a total nap-fest, living in your pajamas for three weeks straight. But sticking to some sort of schedule will make you feel better about how you spent your break. You’ll also go back to college feeling refreshed and ready to sail through the rest of the year.
One way to accomplish this is by carving out some time for a daily workout. No, this doesn’t mean you need to sign up for an aerobics boot-camp class or wake up before dawn for a 40-minute run. You can get your muscles moving with an afternoon jog around the neighborhood or by reacquainting yourself with the elliptical your parents keep in the basement. You’ll feel more energetic and keep the holiday bulge to a minimum.
It’s also important to spend some daily time doing something more meaningful than binge-watching your favorite show or hollering at the football game on TV. You can volunteer at the local soup kitchen, catch up with old friends or use the looser schedule to apply for scholarships.
You’ve been away from home for a while, and you’ve likely undergone some changes in your appearance, personality or even political views since your parents last saw you. You’ve probably developed a sense of independence that wasn’t there when you left home, either. Be prepared for these changes, as well as your prolonged absence from home, to trigger their own changes in the family dynamic.
Knowing what to expect will help you avoid confrontation and misunderstandings. If you feel your newly acquired independence being threatened when you’re back under your parents’ roof, remind yourself that you’re now in their home and you need to play by their rules. You’re only home for a few weeks, so do your best to remain respectful as your parents adjust to any changes you’ve undergone since you left home.
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Football has begun, the leaves are changing, and the kids are back in school. Clearly, it’s time to start thinking about Christmas. Some of you are reading this on your phone while waiting in line at Starbucks, preparing to buy your first Pumpkin Spice Latte of the season, but it’s time to start thinking of peppermint mochas instead. Even if you’re the “Bah, Humbug” type of person who regularly posts Facebook rants about the neighbors putting up their lights before Thanksgiving, making financial plans for the holiday is still a really good idea. It might be too early to hang a stocking, but it’s never too early to sock money away.
Q: How much will I be spending on the holidays this year?
A: Recent studies have pegged the price of the holidays at roughly $300 per child, while one in 10 shoppers admit to spending over $500 on gifts for their children. Overall, Americans spend about $600 billion on Christmas, which comes out to around $2,000 per person. This includes decorations, hams, ugly sweaters and whatever else you tend to buy. That’s a lot of money.
Q: Ugh! Why are we even talking about that money now? Halloween just ended!
A: Halloween is exactly why we should make plans now. American spending on Halloween increases annually. We spend about $7 billion on Halloween, including $350 million on costumes for our pets! It’s easy to overspend in October, let that lead into an indulgent Thanksgiving in November, and then find ourselves putting all our Christmas spending onto a high-interest-rate credit card.
Planning ahead is a necessary step to prevent you from a holiday hangover in the new year.
Q: How bad is it to put Christmas on a credit card?
A: It might be worse than you think. It’ll cost you about $200 per month to pay off an average Christmas debt in time for next year if using a typical high-interest credit card. And if you don’t pay it off by next year, you’re suddenly trying to pay off two holidays at once. That’s bad news. Paying around $400 in interest charges and fees over the course of the year is still $400. That’s probably enough money to turn your average Christmas into something worthy of a televised Christmas special.
Q: Is it too late to get ahead for this year?
A: Not at all. You have a lot of options to save yourself from your own spending. You can sign up for a Christmas Club account, a money market or a variety of other plans. Call, click or stop by Education First for details. But that’s not the only approach. You can also get ahead of the rate hikes by moving all of your credit card debt into a home equity loan. You can check out our rates at or sign up for one of our low-interest credit cards.
But even all those options don’t represent all the various ways to save money. Remember that Christmas spending doesn’t have to be an all-or-nothing proposition. You can combine savings, credit cards and budgeting to attack the holiday from several angles. Start now, and by Christmas you’ll have a well-stocked war chest, or in this case, toy chest, to give you a variety of options.
Q: What about the holidays between now and then?
A: Between Halloween and Thanksgiving, Americans spend around $150 per person on average, which is far more affordable than Christmas. But that can still add up quickly, especially in larger families. It can also be difficult to tighten the belt at this time of year, because it can mean less candy and less family time for the kids. If you’re worried about this spending, one way to rein it in is to make a combined holiday budget you pay into every month. Figure out how much you plan to spend on birthdays, holidays, anniversaries and the like, then divide that by 12. That’s how much you need to put away every month. Does that sound like a lot of money? Then you can cut down all year long. Maybe you don’t need to send birthday gifts to as many people or your anniversary can be a smaller occasion this year. The bottom line: If you start planning ahead, you can keep your holiday spending from being an obstacle to your financial future.
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