I have a question about refinancing an auto loan. In May 2007, I was involved in an auto accident in which the person who hit me completely totaled my car. My car loan on that vehicle was financed through State Farm Bank and my interest rate was around 5 percent. I did not miss a single payment in two years.
At the time of my accident, I had also just purchased a condo. In fact, I actually made my first payment the day of the crash.
Considering my good credit history, I thought getting a new car loan with a decent rate would not be an issue, even though my credit had recently gone through many inquiries to obtain my mortgage.
So I was surprised when I inquired about rates with State Farm Bank and they offered me 14 percent. I refused that offer. However, being in dire need of a vehicle, I was forced to accept an offer with another bank for 12 percent.
I know it has only been a couple months since my purchase, but I just can't swallow paying that much in interest. Since that time, I have received a couple of offers to refinance my loan. I am a little leery of these offers. Is there any true advantage to refinancing an auto loan?
If you can knock more than 2 percent or 3 percent off a car loan, it's probably worthwhile to go for it. Just make sure the terms of the loan are spelled out and it's for the same term as the loan you're replacing.
|Here are this week's reader questions:|
|•||Bargain autos unlikely to catch on|
|•||Should I refinance my auto loan?|
|•||Why would a dealer insist on financing?|
|•||How can I escape crushing payments?|