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Should I Refinance My Car Loan?

Refinancing with Pearl Hawaii Federal Credit Union could help you lower your monthly car payment by getting a better interest rate or changing how long you pay your loan (the term). Ultimately, you can choose the best options for your budget. We have competitive rates to meet your needs.

How Does Auto Loan Refinancing Work?

Refinancing your auto loan replaces your current loan with a new loan. Typically, the new loan will have a lower interest rate, different term, or smaller monthly car payment. You can keep the length of the loan the same as the number of months left on your current loan or you can shorten or extend – dependent on your life situation and needs.

Should I Refinance My Car Loan?

Refinancing your car loan makes sense if rates have dropped, you are having trouble making payments, or your credit has improved. Overall, refinancing your car loan could be a great way to get a lower interest rate that saves you money monthly and over the life of your loan—often without extending your term length.

Interest rates drop due to a variety of reasons. Either the economy has changed or there is increased competition in the marketplace. If rates are lower now, refinancing your car loan could help you pay off your loan sooner or save you money on interest.

Another reason to refinance your car loan is if you cannot keep up with your payments or payments are too high for you. By refinancing, you can extend the duration (or term) of the loan, which will lower your payments. If you extend the term of the loan, you will pay more in interest over time. However, it’s better to pay some interest rather than missing car payments or hurting your credit history.

Lastly, you should refinance if your credit has improved. When you initially purchased your car, perhaps your credit wasn’t the best it could be. With time, you have paid your loans consistently and on time. As you have improved your old patterns, your credit has improved. If so, you should consider refinancing at a lower interest rate.

When Should I Refinance My Car Loan?

In most cases, the earlier you’re able to refinance, the better. Even a small interest rate reduction could result in significant savings over the life of the loan.

Some Reasons Why You Want To Refinance Your Car Loan

If you answer yes to…

  • Your credit score has increased since taking out your auto loan
  • You discover that you’re qualified for better financing terms
  • Your monthly car payments are higher than what you’re comfortable paying

Do not refinance if…

  • You have already paid off a good portion of your existing car loan
  • You have no car loan
  • Your interest rate is already low

Should I Check My Credit Rating Before Applying?

Checking your credit gives you a sense of what auto loan interest rates will be. Make sure you know where your credit score stands and what factors are contributing to your score. Maybe you need to work on your credit and possibly remove a few items that can boost your score. Visit and get a free copy of your credit report every 12 months from each credit reporting company. is the official site to get your free annual credit reports. This right is guaranteed by Federal law. You can verify this is the official site by visiting the CFPB’s website.

Can I Refinance My Car Loan With Bad Credit?

It can be difficult to refinance your auto loan if you have bad credit, but it is possible. We often see people coming in where their credit is not as bad as they think it is. It does not hurt to meet with us to see how we can help your situation.

I Want To Refinance Because I Am Having Trouble Making Payments. Can I?

If you’re having trouble making payments, contact us right away. We may be able to help you based on your current situation.

What If I Want To Refinance My Car Loan To Extend My Loan Term?

Typically, when you extend the term of your loan, you will pay more in interest over the life of your loan. Extending your term could also put you at risk of becoming “upside-down” or leaving you in a negative equity situation on your loan. Essentially, this means that you will owe more than what your car is worth. We strongly do not suggest doing this. If your car happens to ever become totaled or stolen, your insurance will not cover the entire amount of the loan. Also, if you have to sell your car or want to use it as a trade-in, you would still owe money on the loan.


Calculating Car Loans


Do you want to refinance? We will take care of paying off your old auto loan and help you transfer your title once you’re approved. Let’s get started…


Consumer Financial Protection Bureau (CFPB) is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.
















If you need to borrow money, we can help you. If you’re still not sure whether a loan is a right option for you, call us at 808.73.PHFCU (737.4328) or visit one of our locations on Oahu (Waipio, Waianae, Ewa Beach, Honolulu,  Airport,  and Pearl Harbor). Our team is ready to look at your financial situation and recommend the best option for you. You can also apply online to get started…