Calculating Refinance

[CreditJim]

I purchased a car at the end of last year, the interest rate is 3.74%

My credit union does used car refinancing at 1.90% - I'm wondering if it would be worth refinancing and what I'd save. I have made 7 payments of 48 total at $371.22 monthly. I think the credit union charges a fee to do the refinance so I'm wondering if the presumably small savings between the interest rates would be worth it.

[SamsungHDTV]

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@breedo wrote:

I purchased a car at the end of last year, the interest rate is 3.74%

My credit union does used car refinancing at 1.90% - I'm wondering if it would be worth refinancing and what I'd save. I have made 7 payments of 48 total at $371.22 monthly. I think the credit union charges a fee to do the refinance so I'm wondering if the presumably small savings between the interest rates would be worth it.

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Easiest way is to ask the credit union if they have a loan rate comparision. If they don't, then you'll need to know what the fee is to refinance. Usually its a good idea to refinance, but we need more details.

[CreditJim]

I just ran an auto loan calculator amortization table and it doesn't seem worth it. Over the remaining 41 monthly payments I would only save $474 minus the refinance fee, so possibly only around $374 - and that's assuming I qualify for the credit union's lowest rate. I think I'd rather continue the relationship with VW Credit to finance a future VW or Audi. I think I'd be better just making lump sum payments towards the principal whenever I can.

[HoldingOntoHope]

And if you are able to make payments to principal that is going to further reduce the difference, even if you made equal payments to both loans. Establishing a relationship with one of the captive automotive finance companies is never a bad move if you believe that you will purchase from that company again in the future. Sometimes we have to evaluate future benefits against present costs when the amount of money involved is not that significant.