If you’re struggling to keep up with your auto loan payments, you’re not alone. More than 5 percent of Americans are delinquent on their auto loans.* Life throws curveballs—unexpected bills, rising insurance rates, job changes, or just higher costs of living—and sometimes your auto loan payment becomes the one thing you dread every month. When that happens, it might feel like repossession is inevitable. But here’s the truth: refinancing before your car gets repossessed can save you money, protect your credit, and keep you in the driver’s seat—literally.
Repo is more expensive than you think.
When a lender repossesses your car, it’s not just a matter of losing your wheels. Repossession can pile on costs you didn’t expect:
- Towing and storage fees: You may still be billed for these even after your car is taken.
- Deficiency balance: If the lender sells your car for less than what you owe, you’re still on the hook for the difference.
- Credit score damage: A repo can drop your score by 100 points or more, and it stays on your credit report for seven years.
That’s a lot of financial baggage for one tough moment.
Why refinancing can help you protect your vehicle from repossession.
Refinancing means replacing your current loan with a new one—often with a lower interest rate, a longer repayment term, or both. That can drop your monthly payment to something more manageable. Here’s why that’s a win compared to letting your car go to repo:
1. Lower monthly payments.
If your current payment is too high, refinancing can spread out your loan balance over a longer period or secure you a better interest rate. That means more breathing room in your monthly budget.
2. Avoid major credit damage.
Missed payments hurt, but a repossession is far worse. By refinancing before you fall too far behind, you keep your account in good standing and protect your credit score from a long-lasting negative mark.
3. Keep your vehicle.
Losing your car, truck, or motorcycle often means losing access to work, school, and everyday essentials. Refinancing helps you keep the vehicle you rely on, which is especially important if public transportation isn’t an option.
4. Possible lower interest rate.
If your credit score has improved since you took out your original loan—or if interest rates have dropped—you could qualify for a better deal. Even a small drop in rates can save you hundreds over the life of your loan.
When to refinance.
The best time to refinance is before you’re more than a payment or two behind. Once you’ve gone deep into delinquency, lenders are less likely to approve a refinance. Acting early gives you more options and better terms.
Final thoughts.
Letting your car go to repo can feel like hitting “reset,” but in reality, it’s more like hitting “self-destruct” on your finances. Refinancing your auto loan is often a smarter, more affordable path that protects your credit, your budget, and your independence.
If you’re feeling the squeeze, contact us today. Our auto refinance rate is as low as 5.49% APR** with Direct Deposit and Auto Pay (6.49% without discount). That’s savings you can use for gas, insurance, or groceries. Give us a call at 800.877.2345 or apply online now. Acting now could be the difference between keeping your vehicle—and your financial peace of mind—and starting over from a tough spot.
*Osman, Jim, “They’re skipping car payment; that’s the final warning sign.” Forbes.com Published 15 July 2025. Accessed 22 August 2025.
**APR=Annual Percentage Rate. Rates shown are our Preferred rates based on credit worthiness (FICO® Score), and a 1.00% APR Auto Loan discount for Direct Deposit or full Agent Net Check going into a FIGFCU Checking account (either High Yield Checking or CashBack Checking) in the amount of $1,000.00 (one thousand dollars) or more monthly and Automatic Payment/Folio Deduction as a repayment method to qualify. Rates and terms are subject to credit approval. Other rates and terms are available. Other restrictions may apply. Financing available up to 130% of the Purchase Price, including tax, license, warranties and negative equity on a trade for qualified borrowers. Financing available up to 130% of the Purchase Price for a lease buyout or refinance, excluding tax or license, which were paid at the time of purchase. The Credit Union only lends up to 100% loan-to-value (LTV) for clear title or private party purchases. Please speak with a Loan Representative for complete details and qualifying criteria. Rates and terms are subject to credit approval and are subject to change at any time and without notice. All values are determined by the Credit Union using either vehicle cost or Kelly Blue Book/NADA, whichever is lower. Other rates and terms are available.
