Refinancing of an auto loan a 'best kept' savings secret

Your Money

January 25, 2004|By Ilyce Glick

If you're an average American consumer, you have a $12,000 car loan with 18 months left on it, and you're probably paying too high an interest rate.

We Americans love our cars. That emotional attachment sometimes blinds us to what we're shelling out each month to pay for that shiny hunk of steel.

"Refinancing your auto has been one of the best kept secrets for consumers to save money," says Brian Reed of peoplefirst. com, which owner Capital One Auto Finance says is America's largest online originator and servicer of vehicle loans.

For borrowers with excellent credit, online lenders have been quoting rates of under 5 percent this month for refinancing car loans.

Refinancing your car can take as little as 15 minutes through the Internet. To compare rates, it's a good idea to check several sites, of course. Among the largest are eloan.com, lendingtree. com and householdauto.com.

There should be no closing costs with a refinanced auto loan, but you will pay a small fee to transfer the title.

You might decide not to refinance the car loan at all but instead pay it off with proceeds from a home equity loan.

You can hardly beat the rate on a home equity loan or line of credit, and the interest you pay is generally tax deductible.

For a comparison of loan rates on all types of transactions, check out bankrate.com.

Ilyce Glick is a Tribune Media Services columnist.

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