You can refinance car loan to save

By S.P. Dinnen
Des Moines Register

Tom Coverdale figured that the 10 percent interest rate on the loan for his used 1999 Dodge Dakota was about as good as he would find.

What Coverdale didn't figure is that car loans, just like home mortgages, can be refinanced. Only no long waits or steep fees are involved. He filled out a brief application and paid $10 when he moved to a 6.2 percent loan.

"I'm definitely going to save a little bit of money," said Coverdale, a carpet salesman from Urbandale, Iowa.

Coverdale's lowered payments will save him $30 monthly, or $1,440 during the 48 months he has left on his loan.

Lenders, in particular credit unions, have moved into the automobile loan refinancing business. With more than 27 million new and used cars sold at retail every year, there's a lot of money floating around and someone can always figure out a way to refinance it more cheaply.

Coverdale refinanced his loan at Community Choice Credit Union. Josh Cook, marketing manager at Community Choice, said the cost of redoing a loan is minimal — just a $10 fee to file the loan documents with the county.

Cook said he suspected more people haven't refinanced because they assume there's a lot of paperwork. That's not the case, he noted. It's also true that even if someone got a loan from one lender, the loan can easily be moved to another.

The process can get complicated when the owner owes more on the vehicle than it is worth. That's common in the early stages of owning a car, but credit unions can't lend more than the value of the vehicle, Cook said.