Should you refinance your car loan?
Dear 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?
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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