When you finance a loan for a new vehicle, the terms you agree to usually feel right for you at that moment. But as time goes by and your financial situation changes, you may wish you could alter your payments. If that’s how you are currently feeling, the timing may be right to refinance your auto loan with People Driven Credit Union.
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What Is Auto Loan Refinancing?
Refinancing your auto loan in Michigan simply means replacing your previous auto loan with a new one: adjusting your rate, payment term, and/or monthly payment amount. Typically, you would do this by switching to a different lender. (At People Driven Credit Union, it is required that your previous loan was issued by a separate financial institution.) After you switch lenders, the second loan is used to fully pay off the remainder of the first; then you will make your new payments to the institution that issued the refinanced loan. You get to keep driving the car that you love, and you get to move forward with a loan that works better for you!
When Does It Make Sense to Refinance?
If you are wondering when to refinance your car loan, you should consider these five key factors and how they apply to your current situation.
1. Your Credit Score Has Improved
It’s no secret that when you finance a vehicle with a low credit score, the terms will be slanted in favor of the lending institution. However, if you are able to improve your financial situation, that makes you a prime candidate for refinancing. When you refinance after improving your credit score, your rates will be lower, and you may be able to pay the new loan back on a timetable that’s more favorable to you.
If your credit score is not currently where you want it to be, People Driven Credit Union has a number of offerings to help boost your financial standing. In the MyPDCU app, you can quickly and easily check your credit score with the Credit Score & Report feature. Once you know where you stand, you can set a number for your Credit Goal, and the app will offer up customized guidance on how to reach the finish line.
One of the options that may be suggested is to take out a People Driven Credit Union Credit Builder Loan. This is typically a very small loan (sometimes as low as just $100). Once the loan is repaid, you will have access to your funds in a secured account. As you make regular, on-time payments, you can establish a positive credit history, and your credit score will rise. Our Credit Builder Loans offer a safe and structured way to enhance your credit profile while fostering good saving habits.
One last note on credit scores and refinancing an auto loan: During the application process for a refinance, People Driven Credit Union will run a hard credit inquiry, which may have a small, temporary impact on your credit score.
2. Market Rates Have Dropped
The average auto rates offered by financial institutions change over time due to a variety of economic factors. From 2022 to 2024, the average rate surged due to inflation; but it has subsequently dropped by a percent or two throughout 2025.
Sometimes, you may not be able to monitor the market; you may just need to purchase a vehicle to keep you going. However, if you are able to be diligent about tracking the financial market, you may be able to strike while the iron is hot and refinance at a time when the economy is more favorable.
Even if the industry-wide average rates have not dropped, there are times where simply changing your lender may improve your rate. For example, People Driven Credit Union offers loans and refinancing options starting as low as 4.79% APR. If you feel like you are paying too much in interest, you can reach out to a specialist at People Driven Credit Union to see if refinancing your loan would provide some relief.
3. You Want to Pay Off Your Loan Faster or Slower
When folks refinance their vehicle loan, they are often doing so with the intention of paying less per month, which would mean lengthening the term of the loan (going from 36 months to 48 months, for example).
However, the opposite is also an option. If you shorten the length of your loan, you will be paying more per month than before. But this will allow you to pay off your loan sooner, owning your vehicle outright at a faster pace and potentially freeing up money per month that you may need for another purpose.
4. You Want to Add or Remove a Co-Signer
If you are someone with a low credit score, adding a co-signer with good credit to your loan is a smart way to pay a lower rate of interest. However, you may also sometimes need to remove a current co-signer from your loan for one reason or another, and refinancing to a new auto loan can be an easy way to accomplish that. But beware: Doing so has the potential to raise your interest rate (though there is also a chance that removing the co-signer could improve your interest rate as well).
5. You Want a Lower Monthly Payment
The most common sign that you should refinance your auto loan is if you want to pay less per month.
As stated in each of the reasons listed above, there are a variety of ways to decrease your monthly auto payment. However, when you combine them (for example, paying at both a longer term with a lower rate due to improved credit), the savings can multiply quickly.
Your Loan Starts Here
Begin your path to financing your dream. We'll help you turn your financial goals into reality.
How Auto Loan Refinancing Works?
Before you get started on your application to refinance your auto loan, there are a few things to keep in mind.
First, your loan must be for a car, truck, SUV or van that is up to 5 years old. Second, your previous vehicle loan must be from a lender that is not People Driven Credit Union.
Now onto the process of obtaining your refinanced loan.
When you begin your application, either online or at your local branch, you will first need to determine your 10-day payoff. Put simply, this is the amount that People Driven Credit Union will need to pay off your previous loan in 10 days time. Since interest accrues daily, this gives an accurate forecast of the exact value of the loan at a specific point in time.
Once that is determined with the help of your representative, you will need to sign all the relevant documents to close out your prior loan and to allow People Driven Credit Union to pay off the remainder directly. The previous loan must be closed out within 30 days of your application.
After that, all that’s left to do is to start making your new payments and enjoying your savings!
While refinancing your auto loan is one way to improve your financial wellbeing, there are also other ways that People Driven Credit Union can help you. That’s why we have partnered with GreenPath Financial Wellness to provide debt and financial counseling services.
A trusted national nonprofit with more than 60 years of experience, GreenPath’s NFCC- and HUD-certified counselors offer personalized support to help you manage credit card debt, improve your financial literacy, and create a plan to achieve your financial goals. Offering friendly debt counseling with credit report analysis, loan restructuring advice, and other valuable assistance, GreenPath can put you on the road to financial wellness. Reach out to Greenpath online or call at 877-337-3399.
To start on the path to an improved financial situation, refinance your auto loan with People Driven Credit Union today!
FAQs
What documents will I need?
A valid ID and SSN, proof of income, your current loan statement/10-day payoff, and vehicle info (VIN, mileage, year/make/model). We’ll let you know if anything else is needed.
Are there fees when you refinance?
State title/registration fees may apply, and any applicable loan fees will be disclosed upfront. We’ll provide a clear cost summary before you proceed.
Can I refinance a leased vehicle?
You generally can’t “refinance” a lease, but we can often help you finance a lease buyout if you’re purchasing the vehicle.
Can I add GAP or protection plans when I refinance?
Yes. You can add GAP (Guaranteed Asset Protection) and Mechanical Breakdown Coverage during the refinance for added peace of mind.
