Ask Kim
Refinancing a Car Loan
Is there any way to refinance my car loan to a lower rate?
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
July 3, 2003
I still owe about $10,000 on a car loan at 7.5% interest, but I see new car loans going for 2.9% or less. Is there any way to refinance my car loan to a lower rate?
You won't find nearly as many ads for car-loan refinancing as you will for mortgage refinancing, but it's worthwhile to look into it. Only a handful of lenders refinance car loans, and the rates are higher than new-car interest rates. But you still could save quite a bit of money by trading in your old loan for a new one.
Check out E-Loan, which is offering car-loan refinancing for as low as 4.39%. PeopleFirst's rates are similar: 4.39% for 12- to 36-month loans, 4.75% for 37- to 60-month loans and 5.49% for 61- to 72-month loans. You'll qualify for these low rates only if you have excellent credit.
Or, if you have equity in your home, you may get a better deal by exchanging your car loan for a home-equity loan. The rates are low and the interest on up to $100,000 in home-equity debt is tax deductible. Check out BankRate.com for rates. Be careful of fees, though, and of spreading out your loan for a much longer time period than you currently have.