Skip to main content
Routing # 211885946

Everything You Need to Know About Refinancing a Car Loan


This page contains third party links to an alternate web site not operated by the Credit Union. The Credit Union is not responsible for the content and does not represent either the third party or the member if the two enter into a transaction. Privacy and security policies may differ from those practiced by the Credit Union.

Apply Now

Is refinancing your car loan the right choice for you? There are many benefits to refinancing. Although there are many circumstances that would benefit the borrower, there are some instances when refinancing is not the best option. Here are the top six factors to consider before refinancing your vehicle loan.

You SHOULD Refinance if…

  • Your Debt to Income (DTI) ratio or your credit score has improved as a result of an enhanced financial situation.
    If you financial situation has improved since taking out the original loan, you may be able to get a better rate as a result of refinancing. Pioneer Valley Credit Union offers a special loan for those who are looking to rebuild or build their credit score. Speak with a member representative today to learn more about our Credit Builder Loans.
  • You found a better deal on interest rates or loan terms.
    If interest rates have dropped or if you came across a better loan term with reduced payment options than the original amount, it may be a good idea to refinance. This option may also be suitable for those who may be having a difficult time keeping up with monthly bills.
  • Your loan to value ratio on the borrowed vehicle is lower than what the vehicle is worth.
    This means that if you divide how much you owe by your car’s value and find that the vehicle’s equity is positive, you may be able to get a better refinance rate.
  • Your current lender’s prepayment penalties are lower than the amount that would be saved if you refinance.
    Consider the facts when analyzing your monthly budget. If a change needs to be made, see if the benefits outweigh the penalties.


“I saved over $4,000 dollars by refinancing my car loan with PVCU! My monthly payment not only dropped dramatically, I was able to get GAP Insurance.” – Ester C., Baystate Employee and Pioneer Valley Credit Union Member

You SHOULD NOT Refinance if…

  • Most of your original loan amount is already paid off.
    Since the majority of the loan’s interest his paid off in the beginning of the life of the loan and you have held off refinancing for the majority of the beginning of the loan, you may not save enough in interest.
  • Extending your term causes the total loan balance to outweigh the worth of the vehicle.
    It is possible to pay more if the term is extended with the refinanced rate than the actual value of the vehicle. This is also referred to as being “upside down” on your loan. This means that you owe more than you own. Consider depreciation of the vehicle’s value as well as the amount of interest you would pay with the extended term.

Pioneer Valley Credit Union also offers a Car Loan Payment Estimator  to aid its members in their decision making processes! Speak with a member representative today to find out if refinancing your car loan is the right choice for you.

Apply Now   Schedule an Appointment

View All Blog Posts


Blog post currently doesn't have any comments.

Leave comment