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What’S The Interest Rate On Your Car Loan?
Anyone who owns a home is certainly familiar with what their mortgage interest rate is. But a large number of drivers, who purchase cars that can cost $30,000 or more, cannot remember what their interest rate is.
As a matter of fact, according to a recent study, 61% of consumers have no idea what the APR for their car loan is.
The study commissioned by Capital One pointed out that many drivers are probably paying more than necessary. Auto loans can be refinanced saving the consumer money. Another telling statistic from the study showed that 62% of respondents had no idea that they could refinance their auto loan and save money. As a matter of fact I’m in that majority. I never thought to check out the refinancing route on my Mazda MX-5 Miata.
The amount of money you can save via the refinancing path depends on a number of factors including your current credit rating, how much remains on your current loan and the current interest rate vs. the rate of your existing loan.
Let’s look at a thumbnail scenario based on a 5 year $25,000 auto loan taken out one year ago at 9.95%.
If the APR was reduced by 3 percentage points a consumer would save $1,423 over the remaining four years of the loan or about $30 per month simply by refinancing at 6.95 percent APR.
If the APR was reduced by 2 percentage points that same consumer would save $954 over the remaining four years of the loan or about $20 per month by refinancing at 7.95 percent APR.
If the APR was reduced by 1 percentage point that consumer would save $480 over the remaining four years of the loan or about $10 per month by refinancing online at 8.95 percent.
There are some caveats though. Determine if your current auto loan has any penalties for paying off the loan early. This will impact how much you can save from refinancing. And as mentioned, your interest rate will depend on your credit worthiness.
Published: Oct 4,2008 12:07
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Andy Cowan
Andy Cowan, an award-winning writer, whose credits include Cheers and Seinfeld, regularly contributes humor pieces to the Los Angeles Times and the CBS Jack FM Radio Network.
Paul M. J. Suchecki
Paul M. J. Suchecki has more than 30 years of experience as an award winning writer, producer, and cameraman. He's written numerous newspaper and magazine articles. Currently he writes, produces and shoots for LA CityView Channel 35 and his more than 250 articles for Ehow.com are approaching half a million readers.
Coby Kindles
Coby Kindles is a freelance journalist, screenplay writer and essayist. She has been a staff writer at Knight Ridder and a regular contributor to The Associated Press.
Debbie Milam
Debbie Milam is a syndicated columnist for United Press International, an occupational therapist, family success consultant, and motivational speaker with more than 20 years experience. Her work on stress management, spirituality, parenting, and special-needs children has been featured in over 300 media outlets including First for Women, The Miami Herald, Elle, Ladies Home Journal, The Hallmark Channel, PBS and WebMD.
Dan Rafter
Dan Rafter has covered the residential real estate industry for more than 15 years. He has contributed real estate stories to the Washington Post, Chicago Tribune, Business 2.0 Magazine, Home Magazine, Smart HomeOwner Magazine and many others.
Jack Nargundkar
Jack Nargundkar has been repeatedly published in Business Week, The Wall Street Journal, The Washington Post, and The New York Times. He is also an author of "The Bush Diaries" published in July 2005.
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