Refinancing Auto Loans

[Anonymous]

Hi All! I was wanting to get some advice/opinions of refinancing auto loans.

We had a truck financed with Ally about two years ago, and this past month financed a car for me, the loan is with Suntrust Bank at 6%. I have to look up the interest rate for the truck, at least the 6%, probably more. 

So, Suncoast has mentioned that we could refinance the loans with them and the interest rate would be 2-3%.  I'm not sure exactly how the refinance works or if just because it is a lower interest rate means it is something we should do. (note: we are also working on increasing our scores to get a mortgage hopefully this year).

What are the pros/cons? 

Any advice is appreciated, Thank you!

[scorewatcher7]

It should work in your favor. they'll still need to check into the car's age and do a valuation on their own. since your car is only 2 years, they should be able to give you the percentage rate they're stating. However, there will probably be a closing cost involved, so do your homework and weigh it all out. 

[Creditaddict]

If you can get a lower rate then refinance away just make sure you don't take the loan back out longer... so if it was 60 months and you have paid it for 2 years make sure your refinance is for 24 or 36 months.

[Anonymous]

Refinancing an auto loan is very easy. A couple of years ago, I purchased a 2008 BMW 528i with an APR of 13.3%. My credit score was in the tank at that time in my life. After a year and my credit score improving, i refinanced with the same credit union that I had the loan with and my APR was reduced to 2.37%!  

Once the refinancing was completed, I had two options,  keep the payment amount the same before the refinance and reduced the remaining months, or keep the remaining months and reduce the payment amount. Before I refinanced, my goal was to reduced the interest that I was paying so I keep the same payment and which allowed me to knock off 4 months off of the loan entirely. All in all, if you refinance, it will all work out to your benefit. 

[Anonymous]

Thank you All! Sounds like we should give it a try.. I'll post an update after it all goes through.