When I first decided to speed up the payments for my auto loan I didn’t want to refinance or research refinancing because my credit score wasn’t anything substantially higher than when the loan was created.  However, since I am part of the TransUnion Settlement and get my credit score and report free until September 2010 I check it every once in a while.

Upon reviewing my score last time (March 1) , I notice that my score has shot up double digits points to the mid to high 700s!  Once I saw that I figured I should look into auto refinancing.

My Current Auto Loan History

I loved my original car but it had to die eventually.  So I purchased a 2006 Mitsubishi Galant SE for approximately $18,000 with a 13.5% 72 month note in 2006.  I probably should have reviewed how to buy a car, but went with my father to a friend of his who owned the dealership.  Around January of 2008 I lowered it with the note holder with just a phone call to 8.9%, but it was another 72 month note.  So, currently, I am paying 8.9% on a 72 month loan, and there are approximately 46 months left on the note.  Current pay off is approximately $11,300.

My Experiences Requesting Auto Loan Refinancing Information

The first thing I tried was using LendingTree – but for some reason I received nothing back.  I thought this was really odd.  Next I used a text link from Transnion and I had 2 dealers calling me about buying a new car.  Frustrating!

So upon the advisement of one of the new dealers I went to my main bank, Chase, and applied and was PUMPED about the offer I received.

Chase Loan Offer

Wow!  Currently I am paying 8.9% so this will reduce my APR by 3.4%, but would add a few months to the note (kind of since I fully plan to pay it off early with accelerated payments, but we’ll look at those numbers a little later).  Also, the amount is a few hundred les than what is needed, but that isn’t a huge problem because it will just force me to pay a couple hundred to just pay off the noted.

So I figured, if Chase wants to loan me money for cheaper than my current note holder, Wachovia, why not at least give them a shot at my business (and money)!

Wachovia Loan Terms

Hmmm. A better deal than what I am currently paying, but not better than Chase.  Upon checking if I left the note with Wachovia the paper work would be less, and I wouldn’t have to pay an extra $400, and my origination fee would be a few dollars lower, but is that worth the extra APR?  Am I being Lazy and inefficient?

So I called both loan offerors and tried to play them off each other.  As I suspected neither really moved their numbers too much, but Wachovia was really playing up the ease factor.  So it comes down to math.

Math and Calculations of Auto Refinancing

Really the question is whether the ~1.3% saving (6.81% vs 5.5%) plus the added cost of putting another $400 into the loan out of pocket, plus the origination/registration fees ($75 with Chase vs $59 With Wachovia), make it all worth it.

So I loaded up my favorite site, Dinky Town.

With Wachovia

Monthly payment$269.55
Loan amount$11,300
Interest rate6.800%
Term48 months
Total of payments$12,938.12
Total interest paid$1,638.12

Wachovia did offer me a 55 month loan to compare apples to apples but it brought down the interest rate approximately .25% so I’ll ignore that option for the time being.

With Chase

Monthly payment$224.66
Loan amount$10,900
Interest rate5.500%
Term55 months
Total of payments$12,356.36
Total interest paid$1,456.36

It should look like Chase is the winner but with paying an extra $400 at the origination of the loan makes the decision a lot close, and for the hundred or two over the course of a 4 year loan, I think I may go with ease.

I won’t pull the trigger until tomorrow, but I need Comments and Help!  Is my logic faulty? Do you agree or disagree?