Best Loan/Auto Interest Rate Lender?

[Anonymous]

Hi everyone,

I'm new to these forums, but it was in a top 10 list of financial communities to discuss personal finance. I wanted to see if anyone has some suggestions for transferring an auto loan I currently have with Chase, they have me tied in repayment with an interest rate of 6.89% through the life of the loan.

The loan has been paid without problems for about 52 months now, I have 19 months left of payments. I have since improved my credit score significantly. I would like to know from someone with experience if there is any likelihood that it would be worth transferring or renegotiating the loan interest rate with Chase or another bank.

I have heard PenFed has a very low auto loan interest rate, but I'm not sure if it would be the best option to transfer to. I have options at practically any bank as long as the interest rate is significantly lower. I initially had a co-signer for the auto loan, which I can opt to have again if needed.

My current credit score is between 645-656, the assumption of a lower interest rate being possible is based on this article: https://www.automoblog.net/best-auto-loan-rates/

Any thoughts or suggestions?

[SouthJamaica]

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@Anonymous wrote:

Hi everyone,

I'm new to these forums, but it was in a top 10 list of financial communities to discuss personal finance. I wanted to see if anyone has some suggestions for transferring an auto loan I currently have with Chase, they have me tied in repayment with an interest rate of 6.89% through the life of the loan.

The loan has been paid without problems for about 52 months now, I have 19 months left of payments. I have since improved my credit score significantly. I would like to know from someone with experience if there is any likelihood that it would be worth transferring or renegotiating the loan interest rate with Chase or another bank.

I have heard PenFed has a very low auto loan interest rate, but I'm not sure if it would be the best option to transfer to. I have options at practically any bank as long as the interest rate is significantly lower. I initially had a co-signer for the auto loan, which I can opt to have again if needed.

Any thoughts or suggestions?

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The best auto loan rates are with credit unions.

[OmarGB9]

With only 19 months left in the loan, you should be at the point where most, if not all, of your payment is going towards principal.

Refinancing at this point would be a waste of money, IMO, even if you end up with a lower rate/monthly payment. You'd be starting over from scratch and most of your monthly payment would be going towards interest first. I'd just stick it out the remaining ~1.5 years if I were you.

Anyway to answer your question, I agree with the above poster; CUs tend to have great rates. Some good ones are Penfed, DCU, SSFCU, and NFCU if you have military affiliation.

[Curious_George2]

Welcome! This place really is the best of its kind.

Putting some specific numbers on the options might help you decide. If you paid, say, $40k for the vehicle 52 months ago, on a loan with a 6.89% APR, you should have a little over $12k left on the loan now. In the next 19 months, you will pay about $700 in interest on the Chase loan. If you refinanced with Penfed now, got their lowest advertised rate of 2.39%, and paid off the $12k over the same 19 months, you would pay around $250 in interest. In that case, your monthly payments would decrease by about $25. I don't know how likely it is that you would get Penfed's lowest rate. If you got a rate 1 percentage point higher, you would lose about $100 of the total interest savings.

Alternatively, if you did the Penfed refi and got their lowest rate, it would presumably be on a 36 month loan. If you decided to take the full 36 months to pay that off, you would cut your monthly payment in half, but pay about $450 in interest in that time, and end up taking 7.5 years to pay off the vehicle. 

One other thing to note. Since you are watching your credit scores, make sure you're prepared to take a hit if you refi. A new account at 100% of the (new) original loan amount will cost you some FICO points.