Refinancing auto loans: Did you know you could?
Home mortgage refinancing has boomed during the recession, but most people don鈥檛 realize that they can do the same with their auto loans 鈥� and it鈥檚 both easier and cheaper than refinancing a mortgage.
鈥淚 ask people, 鈥楧o you know that every month you leave 100 bucks on your driveway for other people to pick up?鈥� says Mukesh Chatter, creator of an auto loan refinance website. 鈥淭hey鈥檙e shocked. They鈥檝e been doing it for 20 years, for some people, religiously putting 100 bucks out on their driveway.鈥�
He's referring to the savings customers have found through his website , which provides a quick and transparent mechanism for checking out refinance options. 鈥淥n average, people are saving $1,412 dollars per year,鈥� says Mr. Chatter.
When refinancing a home loan, you want to look to decrease 鈥渁t least two points,鈥� says John Siracuse, a California real estate broker and the creator of . The title, costs, escrow fees, etc typically add up to about a percent of your mortgage, so if you can鈥檛 shave off more than that, you鈥檙e better off leaving your mortgage alone.
Refinancing car loans is simpler and easier.
When dealerships publish bargain-basement rates, they don鈥檛 always mention that those rates go to buyers with credit scores over 800. The rates for everyone else can easily run 5 to 10 percent for a new car, or 10 to 15 percent for a used one.
鈥淵ou鈥檒l always be hit with a higher interest rate on an older car,鈥� confirms Mr. Siracuse.
On , consumers with one of these high-interest car loans can refinance quickly and easily. Chatter鈥檚 reverse auction lets banks and credit unions bid for your loan in a transparent system that shows you exactly how much you鈥檒l save over your current loan.
Instead of wandering from bank to bank to seek out the best rate, filling out pages of personal information and risking dings to your credit score with each loan request, consumers can now enter just seven pieces of information and check to see if they can save money. No commitment, no credit checks.
What are the seven facts you need to know? Your credit score (or range), the make and year of your car, the balance on your loan, your current interest rate, your zip code, and your mileage. That鈥檚 it.
Chatter is passionate about saving consumers money. There鈥檚 little in it for him: his company gets a flat fee for each loan that gets negotiated through his website. Other than that, all the benefit is for the borrower.
Word is spreading: every month, his website鈥檚 traffic doubles, Chatter says. He started it in 2007 with CDs and savings accounts, but launched the auto loan program about four months ago. Already, they鈥檙e getting a few thousand visitors per week for auto financing.
The secret to securing a good loan: pay attention to the interest rate. 鈥淒on鈥檛 look at the monthly payment or anything else,鈥� says Siracuse. 鈥淚f you can get a lower interest rate, great. Uneducated borrowers keep getting hurt on their interest rates.鈥� The higher your rates, the more you鈥檒l pay over time, and the longer it will take to pay it off.
So far, 133 banks and credit unions have signed up on . Coverage is far from even, nationwide, but Chatter is working to improve that, with another 102 lenders 鈥渋n the pipeline.鈥� If you live in an area with heavy coverage, dozens of lenders might bid for your loan. If not, you might see the same one or two banks.
Still, it takes less than a minute to enter the information and check, so it鈥檚 worth a pop over to see how much you can save. You鈥檒l be shown a list of loan terms 鈥� 6-year, 5-year, 4-year, etc 鈥� and the three cheapest loan rates for each term. 鈥淚f you don鈥檛 save, there鈥檚 no loss. And if you do save, it鈥檚 money in your pocket,鈥� says Chatter. 鈥淚n a minute, to save a thousand bucks a year? That鈥檚 a minute well spent.鈥�
