bank rates

3 Offers To Refi Your Car For Less Than 3%

Bank of America, Pentagon Federal and Up2Drive are all offering some of February’s lowest auto-refinancing rates with 5-year loans starting at less than 3% APR.

There are two main reasons to refinance your car or truck – to trim your monthly payment and lower the amount of interest you pay over the life of the loan.

Reducing your interest rate can help with both. If you’re currently paying 5% or more, these lenders are offering a cheaper alternative:

  • Bank of America as low as 2.49% APR.
  • Pentagon Federal Credit Union at 2.24% APR (2014 and 2015 models) and 2.99% APR (2013 and older models).
  • Up2Drive for as little as 2.99% APR with auto pay.

Let’s say six months ago you took out a 5-year car loan for $20,000 at 7% APR. Your monthly note would be about $396, and you could expect to pay $3,761 in interest over the life of the loan.

Today you want to take advantage of a cheaper refinance deal.

Assuming you refinanced the remaining balance of $18,300 at 2.99% APR for another five years, your new monthly payment would drop to $329, and the total amount of remaining interest you’d pay would be about $1,425.

You’d have smaller monthly payments and end up paying about half us much in interest.

Bank of America’s 5-year loans are for autos that are no more than 10 years old and have less than 125,000 miles.

The minimum loan amount is $5,000 in all states except Minnesota and South Carolina, where it’s $7,500. Bank of America does not charge a loan documentation fee.

PenFed offers refinance loans as low as 2.24% APR for five years on 2014 and 2015 new cars or trucks (where you are the original owner), and 2.99% APR for five years on used autos.

You have to be a member to get a car loan from the credit union, but just about anyone can join PenFed and take advantage of the very competitive rates. Those who work for the government or a defense contractor, or have served in the military, are qualified to join based on their employment.

The rest of us can become eligible to join by making a one-time $14 donation to Voices for America’s Troops or a one-time $15 donation to the National Military Family Association.

Once you qualify, you would then open a savings account for as little as $5 to establish membership. There’s a $10,000 loan minimum, and you can’t refinance to a lower rate on an existing PenFed loan.

Finance company Up2Drive has dropped refinancing rates to as low as 2.99% for five years on autos that are model year 2008 or newer with less than 100,000 miles.

Up2Drive is a division of BMW Bank of North America, which is a subsidiary of the auto company, but the online lender finances loans for most brands of cars and trucks.

The promotional rate includes a half-point discount for enrolling in Up2Drive’s monthly auto pay program. The company is offering these loans in all 50 states and the District of Columbia.

All of these refinance rates are even lower than the average loan cost of new cars, which is currently 4.08% APR for five years, according to Bankrate’s latest survey of national lenders.

We think you’ll have a tough time finding a better refinance deal. But go ahead and search Bankrate’s database of the best auto loan rates from several other lenders in your area.

This auto loan calculator can determine the monthly payment for just about any type of financing.

You’ll need good credit to qualify for the lowest rates. There are no hard-and-fast rules, but you have the best chance of qualifying if your FICO credit score is in the mid-700s and up.

Loan terms may vary by location, so be sure to check with the lender for specific details.

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