Refinance Your Car Loan Due To Ultra-Low Interest Rates?

Many interest rates are at all-time lows right now. This means that if you have any sort of debt, you should explore refinancing. The goal is to lower your interest rate and monthly payments while paying minimal upfront costs and fees.

Did you know that you can refinance your existing car loan? While I advise avoiding car loans because they turn a painful $1,500 in optional features into “only” $20 a month, I also know that most people do end up taking out a loan. Experian says that 85% of new cars and 55% of used cards are financed as of Q4 2019.

I’ve long recommended a good credit union for a new or used car loan. Below are one refi-centric rate comparison and several national credit unions that offer competitive rates on refinancing existing car loans – down to as low as 2% APR. For credit unions, don’t be afraid to use the alternative paths listed to join. There should be no loan application fee, although you will have to undergo a credit check. You should get multiple quotes to compare, including at least one credit union.

MyAutoLoan.com Refinance

• This one is not a credit union, it is like LendingTree for auto loan refinancing. Open to everyone, you submit one application and they will give you multiple quotes from different private lenders.
• They offer an interest rate estimator tool with no credit check based on your overall credit profile.
• No application fees.
• Refinance for as low as 2.04% APR for 36 months. They seem to specialized in refi, as their listed refinance rates are lower than their new/used car purchase loan rates.
• No payments for up to 90 days for qualified borrowers.

Pentagon Federal Credit Union

• Membership open to active, honorably discharged, or retired military, Federal employees, or select membership groups. This includes being a Red Cross blood donor or volunteer. You can also join the Navy League for $25. I recommend just going through the PenFed application process and let them guide you.
• Currently, they are offering a $250 bonus when you refinance an auto loan with them.
• Refinance a 2019/2020 model year car for as low as 2.14% APR for 36 months.
• Refinance a 2018 or older model year car for as low as 2.99% APR for 36 months.

Navy Federal Credit Union

• Membership open to active military, veterans, and family members of veterans.
• Refinance a 2019/2020 model year car for as low as 2.29% APR for 36 months.
• Refinance a 2018 or older model year car for as low as 3.89% APR for 36 months.

USAA

• Membership open to those with the military affiliation: active duty, Guard or Reserve, a veteran, an eligible family member, or a cadet or midshipman. USAA is the most strict about their membership if you are not military, but they usually have very competitive rates.
• No application fee.
• No payments until 60 days after your loan is approved.

Hanscom Federal Credit Union

• Membership open to active or retired military as well as other partner organizations. If you don’t otherwise qualify, anyone can join the Nashua River Watershed Association for a one-time $35 fee.
• Hanscom FCU offers a 0.25% discount for loans on new and used vehicles (excluding motorcycles) to current active duty members in the U.S. Military.
• No application fees or title transfer fees.

Why multiple quotes? If you apply for a car loan, they will run a credit check and provide a specific rate quote on your credit report data. (Check your credit reports for free once a week until April 2021.) Thus, I wouldn’t only go by which place advertises the lowest “as low as” rate unless you have a perfect credit score. You should apply to multiple lenders and compare as they may target differed borrower profiles. If you make these credit checks within a short period of time (Experian suggests 14 days or less), the credit bureaus should automatically recognize that you are comparison shopping and only count one hard inquiry against your credit score.