Car Loan Refinancing — 13% to 6%
Refinancing from 13% to 6% — what you actually save
Monthly savings by loan balance
| Loan Balance | Old payment (13%) | New payment (6%) | Monthly savings | Total savings (60mo) |
|---|---|---|---|---|
| $10,000 | $228 | $193 | $34/mo | $2,052 |
| $15,000 | $341 | $290 | $51/mo | $3,078 |
| $20,000 | $455 | $387 | $68/mo | $4,104 |
| $25,000 | $569 | $483 | $86/mo | $5,130 |
| $30,000 | $683 | $580 | $103/mo | $6,156 |
| $35,000 | $796 | $677 | $120/mo | $7,183 |
| $40,000 | $910 | $773 | $137/mo | $8,209 |
60-month remaining term assumed. Actual savings depend on your balance and remaining months.
Is a 7% rate drop worth the paperwork?
At 7%, this is a refinance worth doing. Most lenders charge no fees on auto refinancing. Free application, 24-hour approval, and $86 back in your pocket every month. The only reason not to: if you are within 12 months of paying the loan off.
Who this refinance actually makes sense for
13% typically indicates a high-risk loan: significant derogatory credit history, a high loan-to-value ratio, or financing through a buy-here-pay-here dealer. The situation that created that rate needs to be addressed before a standard refinance is possible.
Standard refinance lenders will not offer 6% to a borrower who originally qualified for 13% unless the credit situation has dramatically changed. The path: improve score to 680+, pay down balance below vehicle value, then refinance. Sequence matters.
Buy-here-pay-here and subprime indirect lenders account for roughly 10% of auto originations and the majority of rates above 12%. These loans often carry prepayment penalties. Read your current loan agreement before applying to refinance.
Run your numbers
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Frequently Asked Questions — 13% to 6%
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