In Your Best Interest: Refinancing Matters

It is not realistic to only save and never spend money, but you should choose wisely when it comes to spending. You can watch for sales to help stretch a budget for smaller purchases, but for larger investments like an automobile, there are several other considerations in addition to the price tag. While you should settle on a good price for your new car, it’s also important to keep an eye on your monthly payment amount that comes from paying interest.

The cost of a car is often prohibitive for a cash sale, so the majority turn to financing as a way to pay over time while still going home with a new car. However, there are fees to take out a loan and borrow money; you pay back more money than you borrow. This is where you want to really focus on saving money. Take advantage of refinancing loans to spend smart and keep more of your income.

Two Important Financing Terms

When you borrow money, there are often two terms that matter to your monthly payment to which you should carefully pay attention. When you borrow money, you establish repayment terms such as the time frame within which you owe the full amount and an interest payment, a fee, for borrowing the money. Both affect your monthly payment, but only one matters most to your budget.

Spreading payments over time creates a smaller amount to repay per month, but then you are making payments for a longer period of time, too. This may seem like a good thing because your monthly payment is small, but then, that second repayment term, the interest, makes this less appealing.

The interest is charged as a percentage of the total amount that you borrowed, the principal. This percentage is the fee you pay to borrow and adds to the total of your original principal, the cost of the vehicle. So, if your payments spread over time and you pay longer with interest, then you are paying more. It’s very important to think about the length of time for your loan as well as the amount of your interest rate.

Refinancing Saves You Money

Interest rates may be adjustable and subject to change depending on the economic climate of the nation. As the federal government raises or lowers interest rates, your loan may be affected unless you have a fixed rate so that the original rate also rises or falls accordingly. Now you may be paying even more than at first because the rate has gone up. Thankfully, you have the option to refinance a fluctuating rate into a fixed rate, one that stays the same for the duration of your loan despite the rise and fall of the market.

Fixed rates protect you from the fluctuations and potential increases of your loan payments, but it also locks you into the rate for the long haul even when lower rates become available. Thankfully, again, you can refinance and fix the lower rate to your loan!

Call To Refinance Today

When you refinance your auto loan, you complete the process to attach your loan to the lowest available rate. Now, you are paying less interest and therefore saving money. It’s not always what you earn but how you spend that determines your wealth; understanding and applying for lower interest rates is one great example of this. The sooner you refinance, the sooner you save money.

However, at Millstream Credit Union, we want to ensure you save money, spend well, and earn income. When you call us and complete the loan refinancing process today, you will receive a $100 gas card. Sometimes, it is not always about what money you have but who you work with to keep it. 

Call today to talk with one of our trusted representatives who will start your loan refinancing process and distribute your $100 gas card!