Did you know you can refinance your car loan?
Don’t feel bad if you didn’t. Only 47 percent of the more than 2,200 people surveyed in an online study by Harris Poll for Ally Financial knew they could.
Maybe there’s a savings opportunity for you. Clearlane, Ally’s online auto financing platform, says its customers have reduced their payments an average of $112 a month by refinancing. Some do even better.
According to Clearlane, a customer financed a 2016 Cadillac ATS for $30,200 for 66 months at 14.77 percent and $630 per month. The customer refinanced and got a rate of 3.89 percent for 66 months, saving $144 monthly, with the potential to save more than $10,000 in interest over the life of the loan.
To refi or not?
“Extending the length on your loan means that the total amount you will pay over its lifetime could be higher,” says Natasha Rachel Smith of TopCashback.com.
Find out about any additional fees before refinancing. Check your credit score. If it’s lousy, don’t expect a lower interest rate.
Who’s a good candidate?
“People who had less-than-stellar credit when they got their auto loan, but have been paying on time and in full for the last 18 to 24 months,” says Jeff Danford, Clearlane senior vice president of auto finance for Ally. “Their credit score has likely improved. They may get a lower payment and interest rate.”
To make sure it’s worth it, “ask a financial professional to offer a side-by-side comparison of your current loan with what the lender is offering,” says Theresa Williams-Barrett of Affinity Federal Credit Union in Basking Ridge, New Jersey.