refinancing a car???

[FuzzyToaster]

how does this work? and how long should you have the loan before refinancing it? we've currently made 14 of 72 payments on out car. out interest is crazy high on it. all of our payments have been on time or early. and after we get our taxes done, we are going to put most of that towards the car as well. will this make a difference in the interest rate? i know nothing about this stuff!

[guynavywife]

Its just borrowing more money from another source to pay off the car. If you use usaa, for example, they give car loans. The only issue will be the age of the car.
If you have a credit card that has a low interest balance transfer rate, the type that stays at lets say 4.99 percent until its paid off, that is one way to do it.
however, always be careful with credit cards.

[Shaky]

It will only make a difference on the interest rate if you do refinance with a lower rate. Many banks or credit unions would give you quotes on refinancing. Go to their websites and check them out.

[Rich Lunsford]

Refinancing a car is a terrific idea right now! In essence, you’re trading in your “old” debt for “new” debt. It’s a bit like buying the car in the first place. If you have shown a good payment history, then a refinance can be a great option. A few other things have to be in place as well. You normally can’t owe more than the car is worth. The new bank or credit union that offers the loan wants to be sure that they don’t loan you more money than the car is worth. Basically, you are pledging your car title for the money from the bank. If you don’t pay the new loan, then the bank comes and picks up your car – not a good option.

If your vehicle has held its value, you may not need to pay it down with your tax return dollars. This frees up your tax return for other financial goals. If you do need to pay down the balance to refinance the vehicle, then the tax return dollars are well-spent on paying down the loan to refinance. You’ll likely save a lot on the lower interest over the life of the loan. Keep up the good work!


Rich Lunsford is a CERTIFIED FINANCIAL PLANNERTM practitioner with USAA Financial Planning Services, one of the USAA family of companies. Rich holds the Series 7 and 66 securities licenses. Rich also holds the designations of Chartered Financial Consultant (ChFC®), Chartered Life Underwriter (CLU®), and CHARTERED RETIREMENT PLANNING COUNSELOR (CRPC®).

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.