Refinance Auto Loans Homepage

Question: Would it be foolish to refinance my auto loan now?

(Posted by: Elizabeth M on 2008-10-16 07:06:04)

The reason I ask this is because right now, I don't have a bad deal going. I have always had good credit, and when I got my car, I was approved for 5.99, which was the best availible at the time. It was for a 60 month term. I have made eleven payments, and now I have found a place where I could get 36 months for 4.80 %. My current payment is 273, but I always send 300 anyway...the new payment would be about 355, which I think I can handle, especially given the fact that I would cut a year off of my term. Here is what I am asking: 1. Does refinancing an auto loan have a negative impact on my credit rating? 2. Is this even worth it? I feel like there is an element I am missing. Please advise. - EI

Posted by: Kate on 2008-10-16, 07:34:00

1. No, refinancing actually has a good impact on your credit. It looks like you closed one secured loan (paid it off) and opened another and both are in good standing. 2. It depends. I looked up some numbers for you, and your original amount financed looks around $14,200. You've paid about $720 to interest so far and $2585 to principal. That leaves your balance at $11,565 approx. If you paid on this loan ahead of schedule, you'd pay $2260 in interest and be done October 2012. If you refinance at the new rate (financing about 11700 because of state title transfer fees), you'll pay a total $1606 (old interest plus new interest) and be done (assuming you refinance this month, payments starting in November) November 2011. This is just based on the number you gave me and guessing, but if you can in fact secure that rate change at the lower number of months, this is a great deal for you (if you can handle the higher payment). There is nothing bad I can find about this deal.

Posted by: Judy on 2008-10-16, 07:11:59

I was in a similar situation. I just paid an extra 100 dollars each month towards the payment. It just wasn't worth the time to refinance.

Posted by: src50 on 2008-10-16, 07:23:53

It is not worth refinancing. Just keep paying down additional principal as fast as you can.