Auto ReFi Question

[Vpxggmr17]

So I have a 4.59% interest rate on my car with roughly $30,000 left on the loan. (Bought 10/11 with total loan being $46,000 and change). Dumb in hindsight but I've addressed that before on this forum.

New job has me driving about 1/4th of the amount I was previously which should help me retain some value by not piling on miles (doing about 250/mo now). In addition, I've been able to get a PenFed Credit Union account and then offer roughly 2% interest car loans.

I utilize a service (cost free) that manages my car payments by divising my payment bimonthly to cut essentially pay 13 payments annually. So I had have to factor involving/updating that service if I made any changes to the original loan.

My question is two-fold:

A. What would the process be to refi a car loan with PenFed (has anyone done this before or done a similar process).
B. Would it even be worth it? Financially or Hassle?

[cooliemae]

I refinanced my car loan last year with PenFed. Fairly easy process for me. I completed the form from the DMV showing I was transferring the lienholder to PenFed. I sent that form into the DMV with $20 fee and they mailed out the title to PenFed and provided me with a new one as well.

Of course, your state's process is going to be different, so you'll need to check with the DMV. As far as being worth it, you will of course save money with the lower interest rate. Assuming you've financed your loan at 48 months, then your looking at a savings of about $1800 with the new interest rate. You will save more by paying it off quicker as well.

[Vpxggmr17]

I refinanced my car loan last year with PenFed. Fairly easy process for me. I completed the form from the DMV showing I was transferring the lienholder to PenFed. I sent that form into the DMV with $20 fee and they mailed out the title to PenFed and provided me with a new one as well.

Of course, your state's process is going to be different, so you'll need to check with the DMV. As far as being worth it, you will of course save money with the lower interest rate. Assuming you've financed your loan at 48 months, then your looking at a savings of about $1800 with the new interest rate. You will save more by paying it off quicker as well.

My original loan was 72 months but I'm right around the 45-48 month mark now, so I think I'd be able to re-fi at a 48/mo term and maintain things similarily.

Who do you start the process with first? DMV or Penfed? Have literally zero knowledge or experience with this. Thanks!

[cooliemae]

You'll need to apply for the loan through PenFed first, which means you'll need to open up an account with them. You will need to get a payoff statement from your current leinholder so that PenFed can cut them a check for the payoff amount and assume control over the loan. The next step really depends on your state, so my best advice is to give your DMV a call and see what needs to happen.

[Vpxggmr17]

You'll need to apply for the loan through PenFed first, which means you'll need to open up an account with them. You will need to get a payoff statement from your current leinholder so that PenFed can cut them a check for the payoff amount and assume control over the loan. The next step really depends on your state, so my best advice is to give your DMV a call and see what needs to happen.

Ok, thank you. I had opened an account already with PenFed, just haven't used it for anything yet.

Next step looks like calling the current loan holder for the payoff. Would it make sense to sit down with a PenFed employee when I do this?

Also I'm in Virginia, not sure if that's where you went through your process or not.

[Bob B.]

So I have a 4.59% interest rate on my car with roughly $30,000 left on the loan. (Bought 10/11 with total loan being $46,000 and change).

I've been able to get a PenFed Credit Union account and then offer roughly 2% interest car loans.


B. Would it even be worth it? Financially or Hassle?

I plugged this information into an amortization calculator.

I assumed a 2.4% interest rate, not knowing the exact rate.

If your re-fi was over a 48 month term, you would save approximately $1,800 in interest costs.

Your new payment would be about $740.

Of course, these numbers would change depending on the actual interest rate, and any costs associated with the re-fi.

[cooliemae]

Next step looks like calling the current loan holder for the payoff. Would it make sense to sit down with a PenFed employee when I do this?

Also I'm in Virginia, not sure if that's where you went through your process or not.

The only thing you should need from PenFed is the number to fax the payoff paperwork to once you have it. Make sure that you've actually been approved for the loan of course. Check out Virginia's DMV Page. It looks like you will need to fill out the form and send it into the DMV. Ask the current lienholder if they are going to electronically release the loan once the check from PenFed clears, otherwise you will have to mail in the current title to the DMV so that they can reissue the title with the new lienholder.

Just make sure you get the paperwork submitted asap to Penfed. You have 120 days for them to receive the title. I'm in Wisconsin and the DMV was months behind in processing my title, so I actually had to get a 30 day extension from PenFed, otherwise they were going to jack the APR on the loan to the unsecured debt rate (upwards of 10%).