auto

Should you refinance your car loan?

Tara Baukus MelloDear Driving for Dollars,
Two years ago, I bought a new pickup truck, financing $25,000 at 8.8 percent. I noticed that car loan interest rates seem a lot lower now, and I'm wondering if I can or should refinance my pickup?
-- Josh

Dear Josh,
Based on the information you provided, you are probably a good candidate to refinance your car loan. In general, lenders will refinance cars fewer than 5 years old, worth at least what is owed and have a current loan amount of $7,500 to $30,000. It sounds like your situation fits all those parameters.

You're right that interest rates have dropped dramatically. Even though car loan refi rates are typically higher than new- or used-car loan interest rates, they are still lower than your current loan. At press time, the interest rate to refinance an auto loan for 36 months was at 3.58 percent on average, nationally. You may be able to do even better in your local area, so check Bankrate's Compare Rates tool and shop around. Don't forget to ask your current lender about its rates, as if it is competitive, it may be easier to refinance through the lender.

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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.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

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