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I am on a 60 months plan with USCCU and now they are offering APR rate of 1.36% for 36 months on used and new vehicles as shown here. Is it a good idea to change my loan term from 60 to 36 months considering the fact that I can afford the monthly installments which could be higher that what I am paying for in 60 months term with an APR rate of say, for example x%.

  • What is your actual rate now? Will they actually be willing to give you a new loan? What are the costs associated with the new loan? – Matt R Nov 19 '14 at 21:58
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    You don't mention your current rate. Or country. Or most important, why you haven't asked the lender? – JTP - Apologise to Monica Nov 19 '14 at 22:03
  • Thanks. I just wanted to inquire first here before asking the lender. That's the reason I asked here. I didn't feel like mentioning my actual rate as the rate I am taking about on the website is lower than what I am currently paying. I eventually called the lender and they told me it cannot be applied to existing loan – John Nov 20 '14 at 19:14
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Some places banks/Credit Unions will allow you to refinance a auto loan. My credit Union only does this if the original loan was with another lender. They will send the money to the old lender, then give you a loan under the new terms. They are trying to get your business, not necessarily looking for a way make less money for themselves.

You will have to see how much you will save. Which will be based on the delta of the length of the loan or the change in interest rate, or both. My Credit Union has a calculator to show you the numbers based on keeping the size of the payments the same, or keeping the number of payments the same.

Make sure you understand any limitations regarding the refinance based on the age of the car, and if you are underwater.

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Just call your credit union and ask if they will let you refinance at the lower rate. If they won't, then just increase your payment every month so that your car is paid off early (in 36 months instead of 60). You won't get the lower rate, but since your loan will be paid early, you'll be saving interest anyway.

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