When to Refinance your Auto Loan

Should you refinance your auto loan?

Car buyers will often go round and round with a dealer over a few hundred dollars on the price of the vehicle, all the while overlooking the fact that a poor financing decision could cost them thousands of dollars in interest over the long term. But, don’t worry, all is not lost.

Not sure what refinancing means? No problem! Refinancing is taking out a new loan to pay off an existing loan, typically to receive a lower interest rate and/or decrease your monthly payment. In other words, you are shopping around for an interest rate that is more appealing, and one that best fits your current financial situation and needs.

When does refinancing a vehicle make sense?

We’re all familiar with refinancing a home mortgage. People do it all the time – often lowering the interest rate and saving hundreds on their monthly payments, but few people think about refinancing a vehicle loan. However, many of the same benefits apply. So, when does refinancing make sense?

  • If you didn’t shop around before you borrowed.
    Perhaps you went to the dealership first and found the car or truck you really wanted, but you didn’t shop around first for the best rates with local lenders. Credit unions like Industrial Federal Credit Union in particular, are known for offering favorable interest rates on auto loans to members.
  • Your credit score has improved since you got your loan.
    One of the biggest factors in determining your auto loan status is your credit score. That number helps define your interest rate, what you'll pay for insurance, and what other fees you may be charged. Maybe you didn't have much experience with credit when you purchased your vehicle. Did you know, it can take as little as nine months of steady payments to boost your credit score, and that could result in a cheaper loan if you refinance. Also, these credit ratings are “tiered,” meaning even just a moderate gain can bump you up to the next level and earn you a lower interest rate from your lender. You may even discover a mistake on your credit report that could cost you a better rate. Get a free credit report from the AnnualCreditReport website to check for errors. If you find one and have it corrected, it may be a good time to look into refinancing your vehicle.
  • If you need to extend your repayment term to cut your payment.
    If your monthly car loan note is busting your budget, refinancing to stretch out the repayment period for a longer loan term may help you. For example, if you have 24 months left to pay on the current note but can refinance it for 36 months at a comparable or lower interest rate, your monthly payments will fall. You may pay more in total interest over the life of the loan, but it might be worth it to give your monthly budget a bit of a break.

Refinance for a Reason this holiday season! IFCU is all about making a difference in our communities, and our member's financial futures. Refinance your auto loan from another financial institution with IFCU, and IFCU will donate $67 (67 years in business) to one of four charities of your choosing. Plus, you have the option of 67 days of no payments and a cash-out option. Use the funds for holiday shopping! So, join us in our Refi for a Reason cause. Together we can make a difference! (Promotion runs October 1, 2021 - December 31, 2021)


Still unsure? Check out your potential savings below. IFCU actually provides an auto loan refinance calculator that makes it easy for people to see how much they could save through IFCU’s auto loan refinancing options.

As low as 2.74% APR* for terms up to 36 months.
As low as 2.99% APR* for terms 37-72 months.

How do I refinance my car loan?

Once you decide that auto loan refinancing makes sense for you, there are three easy ways to get started.

Apply Online. There are no application fees when you apply with IFCU. So you have nothing to lose but that high interest rate!


Call into our Loans by Phone Department and apply over the phone. Call 765-771-8000, or toll free at 888-564-4328.


Call and make an appointment to come into the nearest branch that is convenient for you. Call 765-771-8000 or toll free at 888-564-4328 to make an appointment.


GAP and MBP at Lower Prices than the Dealer

If you bought a brand new car, you likely lost a lot of value when you drove off the lot. If your car gets totaled in the first few years you own it, you could be on the hook for the difference between what the car is worth and what your insurance company will pay. GAP coverage can make up the difference, so you don’t have to pay for a car you can no longer drive.

Mechanical Breakdown Protection (MBP), also called Extended Warranty, can protect you from expensive car repairs that aren’t covered by the original Manufacturer’s Warranty. Having an MBP policy could prevent you from having to pay for that new transmission out of your savings, which can be a major ding to your budget.

You can usually buy GAP and MBP from the dealer, but if you purchase them from IFCU, you can often save hundreds or even thousands of dollars for this helpful protection. Plus, you can usually add the policies when you refinance, even if you didn’t get them when you bought your car.

The Sooner You Refinance, the More You Can Save

If you’ve only had your vehicle a few months, you may think it’s too early to refinance. That may not be the case. You usually pay more interest than principal in the early stages of a loan, so if you can get a lower rate, the sooner you refinance, the more you may save.

To see if a refinance makes sense in your situation, talk to a representative at IFCU. Feel free to call us at 765-771-8000, and we’ll answer any questions you might have.

*Annual Percentage Rate (APR). This promotion applies to loans for refinances from other institutions on new or used vehicles (2014 and newer) up to 60 months and (2017 and newer) up to 72 months with certain mileage restrictions. Existing loans with IFCU do not qualify for this promotion. Payment Example: Borrow $19,500 at 2.99% APR* for $350.30 a month for 60 months. Your regular loan payment will resume the month following the 67 days. Interest will continue to accumulate on your loan during the 67 days of no pay. All loans are subject to approval and individual rates may vary based on your credit score, terms, and underwriting conditions. Your actual rate may be higher. Certain restrictions may apply. We may offer other terms and conditions connected with this offer. All Credit Union loan programs, rates, terms and conditions are subject to change at any time without notice. Call us at 765-771-8000 option 1 to talk to a consumer loan specialist for current rates, terms and conditions.

Information and interactive calculators are available to you only as self-help tools for your personal use. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from a Industrial Federal Credit Union professional regarding all personal finance issues. Call 888-564-4328 or find a branch near you.

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