Refinance a Car Loan?

Q – Could I save money by refinancing a car loan? Is it worth the effort?

A – Maybe and Maybe. Let’s say you bought a car with a 5-year or 60-month loan at 7.29%. Then a year later, rates have fallen, and you could get a 4-year or 48-month loan at 5.59%. Two options: stay with the original loan or refinance to 48 months, which means you’ll still have 60 months of car payments. Your original payment was $679, and the refinance loan is $656, so is it worth the hassle to refinance to save $23 a month? Don’t just look at the monthly difference; look at the total amount of interest saved. At month 12, you’ll still pay $4,398 in interest until the end of the loan. If you refinance, you’ll pay $3,333 in interest, a savings of $1,065. You tell me if it’s worth an hour or two of your time to save $1,065. I want to point out that the rates I used were actual car loan rates offered by my Credit Union a year ago and yesterday. Finally, you can answer for your situation by running the numbers through a loan calculator to see the result. If it makes you feel any better, I missed out on this financial hack for a few decades until I got a financial education.