Save Big by Refinancing Your Car Loan

Dec. 21, 2009 — -- I just learned a new way to SAVE BIG and it's too late to make it into my book of that title. Doh! That's the trouble with books. They're so … final. As I've been telling you in this weekly column, I just wrote a book called "SAVE BIG: Cut Your Top 5 Costs and Save Thousands."

It's packed with savings strategies that have the potential to save you at least $1,000. I was all excited last week when I received the first actual, physical, shiny books I could hold in my hands.

But, then, just a couple days later, I saw this great Bankrate.com article about how you can save thousands of dollars by refinancing your auto loan. Wow! I live and preach the power of SAVING BIG but this was a new one on me.

I didn't know whether to be excited or annoyed. I sure wish I had heard of car loan refinancing before my book deadline, so I could have included it. On the other hand, I'm trying to get a dialogue going about the power of SAVING BIG instead of small, so I always welcome fresh savings techniques.

So here's a recap of that great article by Russ Heaps of Bankrate.com, with a few caveats of my own thrown in. Refinancing can save you thousands of dollars over the life of your car loan. With rates where they are right now, if you are paying more than 6 percent, refinancing could be good for you.

I was amazed to read that refinancing a car loan is pretty quick and easy with minimal fees and no appraisal required. Heaps points out several scenarios in which refinancing a car loan could make a lot of sense. I am a big fan of three of them:

If your credit score has improved substantially, which means you'll qualify for a lower interest rate.