When Can I Refinance My Car Loan?

by Tammy T.
(New York)

Question: When can I refinance my car loan? I just got a 2009 car that now has less than 3,000 miles. I financed with Capital One at 6.99% and financed $10689.95 for 60 months and that rate is fixed so now matter what I pay $2044.45 in interest. My car payments are 212.24 monthly.

I want a lower rate or ways to lower that under $2000. Just got the used car, made 2 payments and also made a separate $500 payment towards the principal just recently.

Would refinancing be right for me with this now $12734. debt? And who to refinance with?

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Answer: 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. Don't feel bad though, because that's what dealers do.

Using the assumptions from above I would assume that you could definitely qualify for a better rate and would suggest refinancing with either a credit union or a 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/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 allow refinancing 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, any payment you make over your minimum monthly payment should be applied to principle and effectively lower your finance charges by paying the vehicle off early.

Hope this helps,

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