<prompt> Human: 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 wasnt great, and I had to take the loan out with an independent credit union, not my current bank. Since then Ive 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. People tell me that I can refinance my loan or have another bank such as my current bank, lets 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. But, 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 - Im locked into my current rate, they are under no obligation to refinancesell 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 Im missing?EDIT: Thanks for all the input! I understand a little bit better now :  <response>: Longtime lurker. Nerd in me had to create account to reply to this. I work in a bank lending dept and the reason isnt so much an incentive for your credit union to refinance for them as it is that they can not stop you from doing it. Suppose you have a loan balance, and suppose you want to pay the whole thing off. The credit union can not deny any portion of your payment toward the principle to maintain an open loan balance so they can collect more interest. If you cant see how big banks would abuse this, pm me, ill explain it, but suffice it to say they would never allow your loan to get completely paid off and so therefore you would be paying them interest indefinitely . Now suppose your credit rating is good enough that another finance institution would give you a loan. So when you refinance, what you are really doing is a couple of steps all rolled into one by a legal contract. 1 Your new bank is sending over a payment in your name to your old bank to fully payoff the balance. Your old bank can not deny this if you are authorizing it. You have the right to pay off your loan.2 Your new bank is agreeing to give you a loan in the exact amount as they sent over to your old bank, but with a better interest rate.Your new bank now gains an on time paying customer. Any return is better than the none at all they previously had, especially if they believe the default risk to be low. Your original bank knows this in this case they are your old bank, in other scenarios they are someone elses new bank and also knows that you are a good on-time-worthy-of-credit customer that they dont want to lose. So if they can not stop you from leaving if someone else will serve you better, they may as well refinance you themselves, keeping a good customer even if it is at a lower rate of return for them. Banks are constantly trying to shark prime customers from one another.Tldr: They cant stop you from doing it. 