Car loan oregon refinancing

Your best interest -- Refinancing yout car with today's low rates

So you already refinanced your house. Now, what about your car?

With recent low interest rates, auto refinancing is catching on with some consumers seeking to lower their high interest rates and save some money each month. And that extra cash could come in handy around the holidays, said Joe Kennedy, president of E-Loan Inc., an online lender.

"I still consider it one of the best-kept secrets around," Kennedy said. "It's a great thing for people, especially when their budget is under stress during the holiday season. It's a good way to knock some money off those monthly payments."

Although the amount of auto refinances is headed up, there are still many who simply aren't aware of the opportunity or they just haven't thought about it, Kennedy said. Auto refinancings haven't gotten the widespread attention like mortgage refinancings because the amount of money involved is smaller and the loan terms shorter, he said.

But many are taking the plunge, thanks to the record-low interest rates and aggressive Internet lenders. The number of auto refinancings could reach 565,000 nationwide by the end of this year, which is an increase from about 468,000 in 2002, according to CNW Marketing Research Inc., an Oregon-based provider of consumer spending information for automakers and other companies.

When you refinance your car, you pay off your current car loan with a refinancing car loan from a different lender that has a lower interest rate. Reducing your car loan rate by a percentage or two could save you hundreds of dollars, said Terry Lake, vice president of consumer lending at CEFCU in Peoria.

How much you save depends on such factors as the remaining balance on your existing loan, the difference between the old interest rate and the new rate, and the term of your new loan.

"We try to make sure our members have the best possible deal on their vehicle loans and other loans, as well," Lake said.

Unlike mortgage refinancings, refinancing an auto loan is easier, less time-consuming and nearly cost-free, but be sure to check what you will be paying for. In most cases, the only fee for which the consumer is responsible is the state motor vehicle department to transfer the lien on the car, Lake said.

Who should do it

So what type of people would benefit from an auto refinancing? Those who aren't far into their loan term or those who had high interest rates because of bad credit could benefit from refinancing, said Douglas Kruse, president and CEO of BankPlus in the Peoria area.

"The advantage to refinancing an auto loan is getting more favorable terms, whether it's a better rate or payment," Kruse said. "Sometimes the payment is more important if you are under financial pressure."

But make sure your credit is good or has improved, Kennedy said.

"It's a magnificent opportunity for people whose credit has improved over the last couple of years," he said. "If you had a high interest rate on a loan a couple of years ago, but have done well and got your credit in order, you would get a double bang: the benefit of the interest rate coming down and the benefit of your credit improving."

But as with any financial decision, whether or not you should refinance depends on your individual goals, Lake said.

"We walk through the process with our members to make sure it is a good deal for them," she said.

If your goal is to reduce the amount you are paying in interest, you may want to consider an auto refinance loan with the same or reduced term as your existing loan, according to LendingTree. If your goal is a smaller payment, you may want to consider extending the term remaining on your existing loan - but be careful, because this may increase the total interest paid over the life of your loans. Extending the life of your loan could mean it will take you longer to pay off your car.

"The only con for people to watch out for is if you have 36 months left on a loan, it could

be very tempting to refinance that remaining 36 months over 60 months," Kennedy said. "But remember: If you extend the ultimate payoff date, it may lower the payment - but you're actually increasing the interest costs. You should have discipline in maintaining that payoff date."

Check around for rates

So where should you go to get your auto refinanced? Experts recommend checking out local banks and credit unions, along with the numerous online lenders, to find the best rate. Web sites such as eloan.com, bankrate.com and peoplefirst.com have calculators to help you figure out what your monthly payment would be.

For those interested in refinancing their car loans, think early. It's important to refinance your auto loan early into the loan because with car loans, the interest is mostly paid in the earlier payments, Kennedy said.

Unlike home loans, auto loan rates typically are tied to the two- year Treasuries, which haven't increased as much as the long-term rates, he said. But that doesn't mean the rates will stay low forever.

"It will probably more likely head up than down, so the refinancing opportunity shrinks month by month," Kennedy said.