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Some car buyers are unaware of their options for financing

As we move further away from the credit freeze, some consumers might want to think about taking a blowtorch to high-rate car loans that they took out just two years ago or so.

It may be possible to find -- and yes, qualify for -- a lower rate that would make refinancing an existing car loan a great way to save money.

Jessica Hearns, 23, bought her used car during the financial crunch in July 2009. She didn't have much of a credit history, and she ended up getting stuck with a 19 percent rate for a five-year car loan on her blue 2007 Chevrolet Impala.

Hearns, who works at MGM Grand Detroit, said her mother kept nudging her to refinance that loan.

"She said my interest rate was entirely too high," Hearns said.

In January, she worked with the Communicating Arts Credit Union in Detroit to refinance the loan to a 3.5 percent rate for three years.

The payment dropped to $165 a month from $225 a month.

"You save a lot of money, and it's a great deal," Hearns said.

Consider another example: What if you could qualify for a car loan at 4 percent to replace an old loan at 12 percent?

In this case, a consumer could save around $49.50 a month, according to an example worked up by Greg McBride, senior financial analyst at

Say a consumer took out a $20,000 five-year loan at 12 percent two years ago. That payment would be $444.89 a month.

Now that there's three years left on that loan, you'd want to refinance to a three-year loan. The idea is not to refinance and string out the payments even further.

If someone's credit has improved, the consumer might qualify for a 4 percent rate on a three-year car loan and end up paying $395.46 a month, he said.

In that example, McBride said, the customer would save $1,780 in interest over the life of the loan by refinancing to that deal.

The survey in early February showed that the average five-year new car loan rate was 5.24 percent and the average three-year used car loan rate was 6.22 percent.

But rates can be significantly lower at some lenders.

If you want to get a car loan -- or refinance one, it's important to shop around on rates.

It's also a good idea to know what your credit history looks like, too.

The refinancing car loan deal you'd get, of course, depends on your credit history, age of the vehicle, and whether you have a job.

"They're not going to issue you a new loan unless you have a way to pay for it," McBride said.