ANDY'S CONSUMER TIP OF THE DAY: auto refinancing

ANDY'S CONSUMER TIP OF THE DAY: auto refinancing

MEMPHIS, TN (WMC) - Refinancing your car loan could really lower your monthly payment, especially if you're paying six percent interest or more on your current auto loan.'s Tara Baukus Mello said if you're considering refinancing your auto loan, here's what you should know:

* If you're behind on your current loan, most lenders won't re-finance you, although there may be an exception. State Farm Insurance, for example, offers auto refinancing with no application fees or closing fees, and it also offers free 'gap insurance' to clients who are upside down on their current loans (for my guidance on gap insurance, click here).

* You should only consider refinancing your auto loan if your vehicle is less than five years old and it's worth at least what you owe (notwithstanding the State Farm exception).

* You should consider auto refinancing if you owe more than $7,500.

Unlike a home re-fi where you might extend the loan on that appreciating asset that is earning equity, you should only refinance a car loan for the same number of months remaining on your current loan. Obviously, you don't want to stretch out a loan on a depreciating car.

word of warning: bailing out of your current loan may cost you a pre-payment penalty. You will also likely pay a small fee to transfer the title to the new loan. Check with your lender. breaks down the five best situations for refinancing an auto loan here.

For's guidance on whether you qualify for an auto re-fi, click here. also offers a handy auto refinancing calculator right here.

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