Refinancing car loan could save you money

Going out to buy a new or used car later this summer? Ever imagine that you might want to refinance that car loan soon after you buy a car?

Most of us only think about refinancing when it comes to a mortgage. But credit unions and banks will give you a chance for a re-do on a car loan, too.

On average, consumers saved $52 a month by refinancing car loans when they wanted to reduce their payments, according to a TransUnion study of 1.5 million refinanced car loans in 2013 and 2014.

On average, consumers reduced the interest rate by 2.4 percent.

The average monthly payment for an auto loan is $500 to $525 — meaning some could save roughly 10 percent a month.

Never heard of anyone refinancing a car loan? You’re not alone. Auto loan refinance information is hard to find

Many times, you’re not going to know about re-fi options unless a lender is pitching you a program — and many lenders aren’t running big TV ads for these deals.

TransUnion’s research indicated that nearly two-thirds of major lenders offer refinancing programs for auto loans. But many times you cannot spot such offers easily online, said Brian Landau, senior vice president and automotive business leader at TransUnion, which reviewed information on 1.5 million refinanced auto loans originated in 2013 and 2014.

Sometimes, Landau said there’s been a reluctance to go after another lender’s customers when it comes to car loans. Car loans, after all, are far smaller than a home mortgage. Some lenders are wary of breaking unwritten rules that could harm relationships with car dealers who are at the front lines of making car loans.

If you do a Google search on refinancing car loans, though, you do see some names of lenders pop up, including Capital One and PNC Bank.

You also can compare auto loan refinancing rates at LendingTree.com — which notes that refinancing amounted to 21.5 percent of all completed auto loan requests through for the first half of 2018.

At PNC Bank, for example, consumers can apply online, on the phone, via a mobile phone or tablet or at a branch.

Depending on applicant’s qualifications and credit history, the consumer could be approved for a refinance car loan in as little as 30 seconds, according to a PNC spokesperson.

Some consumers could save real cash.

“I think it’s a huge opportunity for people to lower their monthly payments, but most people don’t know they can do it,” said Hank Hubbard, president of One Detroit Credit Union.

One Detroit Credit Union says it has saved its members about $3.2 million in interest through its “Refi My Ride” program in the past four years.

Hubbard said on average the old car loan rate was around 14.5 percent — and the average refinanced rate is about 6.75 percent. Some people qualify for even lower rates, as well.

The highest allowable vehicle loan rate is 25 percent in Michigan and the credit union sees plenty such higher rates, he said.

A key point: You should be up to date on your car payments, if you’re wanting to refinance.

Also many institutions won’t allow you to refinance a car loan if the amount owed on the car is greater than the value of the car.