Car Loan Refinancing Questions

A Refinance Questions from Tammy T. in New York...
Would car loan refinancing be right for me?

I just got a 2009 car that now has less than 3,000 miles on it. I financed through Capital One at 6.99% with an amount financed of $10689.95 for 60 months and that rate is fixed so now matter what I pay $2044.45 in interest.

I'm paying a $212.24 monthly payment. I want a lower rate or ways to lower that interest under $2000. Just got the used car and have made 2 payments plus made a separate $500 payment towards principal just recently.

Would car loan refinancing be right for me with this now $12,734 debt? And who to refinance with?


Hi Tammy,

I'm going to make a few assumptions here based on what you've told me so far...

A) You have very good credit and

B) You either had a fairly large down payment and/or a good amount of trade equity applied to your deal.

More than likely you were actually approved for a 4-5% rate with Capital One and the dealer marked that rate up (see Car Dealers Finance Profits). Don't feel bad though, because that's what dealers do and it's how they get paid for arranging your financing.

Using the assumptions from above I would think that car loan refinancing would be something to consider. You would more than likely qualify for a better rate and I would suggest you look to refinance with either a credit union or a traditional bank. Actually in your case I'd think that a bank would be the better way to go as they tend to offer better rates on new and/or near new vehicles.

I would recommend that you take a look at US Bank, Bank of America and/or Chase. I'm pretty sure all three will allow you to refinance and would venture to say that they all would be able to (of course there are variables to your situation that I don't know) lower your rate, which in turn would lower your finance charges.

By the way, through Capital One Auto Finance, any payment you make over your minimum monthly payment should be applied to the principal and effectively lower your finance charges by paying the vehicle off early. In other words, your finance charge (interest) should not be a fixed amount.

Hope this helps,

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