conversation: User (nymusix): "So when I graduated from college, I took out some financing on a car in addition to opening my first credit card. Because of my lack of credit history, the APR on my car loan wasn't great, and I had to take the loan out with an independent credit union, not my current bank. \n\nSince then I've been very diligent about paying my card balance off every month and making all my loan payments; as a result, my credit score has increased significantly over the past year. \n\nPeople tell me that I can refinance my loan or have another bank (such as my current bank, let's call it Bank of Shmamerica) buy the loan out and give me a more favorable rate. I understand why a bank might want to purchase that debt - having customers with good credit is a good thing. \n\nBut, from the perspective of the credit union, what is the reason they would sell that loan or refinance? They have no incentive from what I can tell - I'm locked into my current rate, they are under no obligation to refinance/sell the loan out. The only rational reason I can see is that they would want to keep me as a customer after I close out my loan. Is there a more obvious explanation that I'm missing?\n\n\nEDIT: Thanks for all the input! I understand a little bit better now :)"
  Self: "Yup, the more obvious explanation is that your bank isn't selling the loan...you're just paying it off with funds from another bank.\n\nAs far as the incentive for them to refinance in-house...there's basically none.  Yes, you would think they would rather keep the loan than entirely lose it to another bank.  But honestly the major banks are so big that there's little point to even bother dealing with it when you can just find another bank online in 30 seconds to buy out your loan for a better interest rate."
  