How do I find the best rate to refinance my car loan?

November 25, 2013 2:43 PM

My credit is good. My loan on my new-last-year Toyota Yaris is awful; the interest rate is absurdly high. My credit union, who issued the loan, doesn't want to help. How do I find the best rate I can get on a refinance?

This rate is just ridiculous, like absurd. I check my credit score, and it's good. And even people with bad credit get better rates than this. This is like the rate you give to someone who just got out of jail and walks in carrying a human head. I only agreed to it because my old car had just been totaled and I wanted a new car fast.

I'm positive I can get this thing down 5 points or even more. I've seen the previous question on this, and while it had good advice, it didn't give me what I want:

One website I can go to, put in my info, and have banks compete for my business by coming to me with rates and terms, without me having to do a ton of legwork. Without that, I don't know where to look, besides doing it bank-by-bank, which I don't want to do if I don't have to. As far as "join a credit union," I've been in one since 2001, which is why it's so disappointing they gave me the worst rate in the world. I'd be happy to join another one, but I need a specific name or a way to do a search for the one who will offer me the best deal.

As always, thanks for your help!

posted by drjimmy11 to Work & Money (16 answers total)

Response by poster: ps It's worth a percentage point or two to me not to deal with the hassles and sleaziness of someone like say, Wells Fargo. For moral reasons, I don't think I would do business with B of A under any circumstances.
posted by drjimmy11 at 2:50 PM on November 25, 2013 [2 favorites]

the "join a credit union" step for most CUs these days is ridiculously easy, like done automatically as part of the loan paperwork. The car dealership I bought from paid in the $25 minimum share account (yeah, I know, they made it up in the car)... Most CUs that advertise locally are "open charter," which means they'll take about anyone who's not just out of jail, carrying a human head. The ones that are truly traditional CUs for the benefit of a company's employees don't usually advertise, unless the employer is really huge in your community (like military or state government, where you live in the capitol).

I'd check out a few local banks and CUs and explain my situation. As long as the object is to get a reasonable rate, not get the ABSOLUTE LOWEST RATE ANYONE COULD POSSIBLY GET, EVER, you can probably get a feel for that going rate in 3-5 calls or web site perusals.

I'd also contact the CU carrying your loan already and ask what's going on. Be sure to tell them you're shopping. They might improve your deal to keep the loan, and that way you might not have to go through all the mechanics of refinancing the vehicle.

One hassle you may find is that you bought a new vehicle, but what you're now financing is a used vehicle. Yes, you're the one who's been using it and paying for it, but they're still going to compare the CURRENT value of the vehicle with what you owe on it, and used rates are often not as good as new. Still, I got a <3% rate on a 4 year old car 2 years ago, so you should be able to save...
posted by randomkeystrike at 2:52 PM on November 25, 2013

Response by poster: I'm actually realizing that maybe I do want more concrete recommendations, as in specific banks, if you have them. I did find this search engine, but it brings up banks like "Lightstream," that I've never heard of and might be total fly-by-night for all I know.
posted by drjimmy11 at 2:53 PM on November 25, 2013

Response by poster: I'd check out a few local banks and CUs and explain my situation.
This is exactly what I asked the question to avoid having to do.

I'd also contact the CU carrying your loan already and ask what's going on. Be sure to tell them you're shopping.
Just got off the phone. The woman was openly hostile and claimed they "don't refinance loans." When I told her I was calling to give them the chance to keep my business, she said "OK" in a disinterested voice, at which point I hung up. That ship has sailed.
posted by drjimmy11 at 2:54 PM on November 25, 2013

So you are not interested in local credit unions, or banks you haven't heard of, and all the big name banks thus-far mentioned in this thread are ones that you have moral objections to. What sort of banks would you consider actually using?
posted by tylerkaraszewski at 2:57 PM on November 25, 2013 [1 favorite]

Response by poster: So you are not interested in local credit unions,
False. I am definitely interested, I am asking for the name of another credit union besides mine (First Entertainment)

or banks you haven't heard of
False, I would just prefer a personal recommendation in that case, or a site with reviews. Thus me asking the question.

and all the big name banks thus-far mentioned in this thread are ones that you have moral objections to

False. I mentioned exactly one major bank which is famous for its racist and exploitative business practices.
posted by drjimmy11 at 2:59 PM on November 25, 2013 [1 favorite]

Best answer: thanks, Moonorb. I swear I'm not trying to be prickly here, but I am not eligible to join Penn Fed unless I first join "National Military Family Association or Voices for America's Troops," and even then I am not guaranteed to be approved.

Maybe I should rephrase: if anyone has a good solid reputable credit union that will accept an average person living in Los Angeles without too many preconditions, and that does refinancing of auto loans, please let me know. Thanks!

Otherwise, I might just try lendingtree.com, which seems to do the kind of search I want.
posted by drjimmy11 at 3:10 PM on November 25, 2013

Wells Fargo was zero hassle for me, I hate to admit because I so dislike big banks (and agree re BofA). If you can get into JFCU, they keep begging me to buy another car and offering me rates at 2%. AAA offers auto refinancing.
Is there any kind of prepayment penalty on your loan? I'm concerned similar to randomkeystrikes that now it's a used loan, not new, but I'm not sure how that works.
As pissed off as you are at your CU (and I don't blame you), maybe call a manager and ask why you ended up with that rate and see if they an work with you to lower it.
I'm not sure we can answer this, it's too dependent on your personal circumstances.
Sorry, this sucks...
posted by mrs. taters at 3:15 PM on November 25, 2013

Don't call. Go visit the credit union and ask to speak with a manager. 1. You want to let them know of the poor service you received when you called. 2. Would they like to talk to you about refinancing the loan.

My son has a weird credit union that seems to have no physical presence, doesn't answer calls, and has no service at all, so yeah, there are bad credit unions. But a bricks-n-mortar one is likely yo have good service. Get recommendations from friends, too.
posted by theora55 at 3:17 PM on November 25, 2013

Mod note: OP, please stop threadsitting. Take the advice you need, feel free to leave the rest.
posted by jessamyn (staff) at 3:17 PM on November 25, 2013

How about Baxter CU? They do refinancing. I don't have a loan with them, but I am a member and have never had a problem with them.
posted by hazel79 at 3:49 PM on November 25, 2013

Honestly, credit unions generally have better rates, but they also have more hoops. I've financed 3 cars through PenFed and have been completely happy with my rate each time. Alliant Credit Union is another CU that I have used and like a lot. NASA also is great. But I have also had good luck with some local credit unions as well (and have been surprised by how high rates at others in my community were, so it's definitely a mixed bag).

I know you don't like Wells Fargo, but they are also competitive and hassle-free for this kind of thing; I have my mortgage with WF and have never had a problem, and they actually BEAT the rate PenFed offered to me on an auto loan a few years back. I wouldn't put my savings or checking at a Big Bank, but for a loan, where you just set the autopay and forget it, Big Banks are really fine.
posted by rabbitrabbit at 3:51 PM on November 25, 2013

If you qualify, there's no better financial institution than USAA, which at one point was limited to active-service officers in the US military, but which has expanded significantly since my father was a JAG.
posted by Mad_Carew at 4:09 PM on November 25, 2013

I assume you've already checked BankRate and eliminated the options they've given you? Because if not, that's where I'd start.

Just FYI, for a 36-mo auto refinance in Los Angeles, CA, the top choices are: BlueHarbor and Lightstream. I've never heard of either although the latter seems to be a division of SunTrust which is a legitimate if typical operation while the former is a broker that passes through to a network of actual lenders (much like a mortgage broker; I didn't know such a thing existed for smaller loans although it makes sense).

Might be worth asking around locally and see if anyone in your area has used them, at least.
posted by Kadin2048 at 8:21 PM on November 25, 2013

Best answer: Not to threadsit further, but just to update that I used lendingtree.com, got a series of quotes, and picked the lowest rate from the first one that seemed reputable (Capital One.)

This was very nice as it was an actual bank and not a third-party service that would have made me jump through endless hoops. They emailed me a quote within 5 minutes and I e-signed the loan with 10. I now have a six-points-lower rate and a $50 lower monthly payment. Thanks for your help!
posted by drjimmy11 at 9:08 PM on November 25, 2013

I was going to mention Capital One. I have a card with them that has had a 4% interest rate on it for nearly 10 years.

I find them very easy to do business with, considering that they're a monolith.
posted by Ruthless Bunny at 6:10 AM on November 26, 2013