Refinance your car loan to a lower rate?

Tara Baukus MelloDear Driving for Dollars,
I am thinking about refinancing my car. I have a 5.39 percent loan with 50 months left, and I could refi my car loan for 48 months at 2.99 percent. Is this a good idea?
-- Steven

Dear Steven,
Reducing your interest rate and the length of the car loan will save you money in overall interest, but the effect of the better interest rate will be at least partially offset by the term of the new loan and the loan costs. As a result, you may find it is pretty much a wash, depending on what you owe on your car loan and any fees involved in the refi.

To see if refinancing your car loan is a good fit for your financial situation, use Bankrate's mortgage refinance calculator, and enter in your car loan data.

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If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories. Follow her on Facebook here or on Twitter @SheDrives.

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