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My spouse and I bought a car through a dealer, so our credit can build (both had on lower end credit scores). Now it's been a year and a half, our scores are up quite a bit, we are wanting to refinance our car loan as the interest we are paying is extremely high. Is it possible to go through a credit union or something to refinance? Or how do I do it? Where do I go? Thanks in advance!!

Depending on how long your original loan term was, it might be cheaper to just finish paying the loan. You pay the bulk of the interest in the first 1/2 of the loan term, so you're likely just getting to the point now where you're going to start slaying the principal. If you start with a new loan, you're going to pay all that interest again. Even at a lower rate, it might be more than what you're paying on interest for the balance of this loan at this point.  
 
You'll need to get a breakdown of how much money has already gone to interest (you can figure this out by using an online calculator that gives you a monthly breakdown) and then how much interest you'd pay on a new loan. Also, don't forget if you apply for new credit too often, it will lower your score again.  
 
A better idea may be to just double-down on your payments and get it paid off as soon as possible.

To pay it off as is to be honest.  
 
For all the reasons stated in the post above, but it does add heft to your credit history to have a loan like that followed to the letter.  
 
What it shows (if you have never missed or been late for a payment) is that you can honour a loan term and are not a "flight risk". Agencies do not like to see people who get into contracts and cancel them early, even if it is just refinancing for better rates or consolidation.  
 
That loan, once paid in full, will be like an extra gold star on your report.

It doesn't matter how much money has already gone to interest. What matters is what interest rate you're paying now vs what you could get for the remaining term. Look on some of the bank sites and they will give you an idea of what kind of rate you might get (depending on your credit score). Compare that to what you're paying now. If there is a substantial difference, you may be able to either pay it off much sooner if you keep the payments the same, or pay it off in the same amount of time with a lower monthly payment. Here is an easy calculator to use:  
 
http://www.myamortizationchart.com/loan-comparison-calculator/  
 
The other thing you might want to check is the terms of your current loan. Most do not have penalties for early payout, but if your original loan was from a "last chance finance" type of deal, there may be penalties for paying it off early.  
 
If you do that interest rate comparison and you can get out of your existing loan without a substantial penalty, go to your financial institution and see what they will do for you.  
 
Good luck!

TryThisName said "It doesn't matter how much money has already gone to interest. What matters is what interest rate you're paying now vs what you could get for the remaining term. Look on some of the bank sites and they will give you an idea of what kind of rate you might get (depending on your credit score). Compare that to what you're paying now. If there is a substantial difference, you may be able to either pay it off much sooner if you keep the payments the same, or pay it off in the same amount of time with a lower monthly payment. Here is an easy calculator to use:     http://www.myamortizationchart.com/loan-comparison-calculator/     The other thing you might want to check is the terms of your current loan. Most do not have penalties for early payout, but if your original loan was from a "last chance finance" type of deal, there may be penalties for paying it off early.     If you do that interest rate comparison and you can get out of your existing loan without a substantial penalty, go to your financial institution and see what they will do for you.     Good luck! "

You don't always pay less. Only if you pay higher payments will you pay less, and shorten your term period. Plus, not only penalties but fees for the loan itself.  
 
For example, let's assume they borrow $10,000 initially. We'll also assume a 48 month term and 7.5%. At the end of the term, they will have paid $10,000 principal and $1,605 interest, making payments totaling $11,605, or $241/month. We're going to assume the financing/processing fees for the loan were paid in cash and not rolled into the loan.  
 
The OP says that they're about 1.5 years into their term, so 18 months. On that loan, after 18 months, you would have paid $864 in interest, more than half already. The loan would have a remaining balance (principal only of $5,027 after 18 months).  
 
Let's do what you're suggesting, and roll it into a new loan. They want lower payments, so they keep the new term at 48 months, and they manage to lower their rate by 2.5 points to 5%. At the end of their 48 months, they will have paid an additional $996 dollars in interest. Add that to the $864 they already paid for the previous loan, and the total is $1,448, or about a $157 difference.  
 
But what about fees? We didn't factor fees into the first loan, so we didn't calculate it, but last time I took out a loan I paid more than $157 in fees. So really, you're not ahead. Plus, like you said, there might be penalties for paying off early.  
 
Now, you could save yourself a lot of hassle and just pay more on your existing loan. With just an extra $100 a month, you can pay off the loan in about 12-14 months from now, and save yourself more than $157 in interest. You'd also save the fees.  
 
The goal isn't always paying the lowest fee, but getting it paid off as quickly as you can so there is no debt. If the OP can manage an extra $100 a month, they can have a paid-for ride in about a year, and then that money can be directed elsewhere.

That's a lot of math, that doesn't matter based on my statement "for the remaining term". If you're trying to save money, you don't extend the term of the loan. I was talking about a new loan that would end the same time as the existing loan with a lower interest rate. Interest is charged on the balance owing, that's why you pay more at the start (because the principal is higher at the start). If you had a 5 year loan and were a year and half in, the replacement loan should be for 3.5 years, not restarting a new 5 year loan.  
 
As for fees, I've always had the bank absorb them. They want the business (and the interest), they can process the paperwork.

Thankyou for all of your answers, however I'm a tad confused now, what do you guys mean that interest is payed most in the beginning, so my payment will be lower in the end? Because I'm paying a monthly interest rate base on what's left, so if there is less money owing, less monthly payment? I thought it was a flat rate for all 5 years...im confused ,I'm sorry, I'm just new at all this and don't understand it all :/

At the beginning of your loan most of your payment is to Interest and less to principal and then it flips as you get near the end of your loan. So for example of your payment is $300, the beginning your payment would likely be 200 to interest ans 100 to the actual amount of the loan....eventually it flips and soon you will twindle down the interest and will pay say 75 in interest and then 225 to the principal amount of the car loan.

Family4ever said "Thankyou for all of your answers, however I'm a tad confused now, what do you guys mean that interest is payed most in the beginning, so my payment will be lower in the end? Because I'm paying a monthly interest rate base on what's left, so if there is less money owing, less monthly payment? I thought it was a flat rate for all 5 years...im confused ,I'm sorry, I'm just new at all this and don't understand it all :/ "

probably easiest to google a loan calculator that shows how the payments are applied throughout your loan, might help you make sense of the opinions regarding the best thing for you and your loan  
 
when deciding what is the best i always use one of these calculators so i know what is going on, you may choose lower payments over longer but then you will also know exactly what that choice cost you then you decide if its right for you or not  
 
http://www.thecalculatorsite.com/finance/calculators/carloancalculator.php  
 
i just typed in simple numbers to help keep deciphering easy, 10,000 loan over 48 months at %5 (hard to read here but if you go on the calculator its easier)  
 
Initial vehicle deposit:  
$0.00  
Loan payments:  
$11,054.06  
Balloon payment at end:  
$0.00  
Total payable:  
$11,054.06  
48 monthly payments of:  
$230.29  
Total interest:  
$1,054.06  
Start date: July 1, 2016  
End date: July 1, 2020  
Vehicle Value: $10,000.00  
Interest Rate: 5%  
 
Vehicle Loan Repayments by Month  
Month Balance Principal Interest Payment  
1 $ 10,000.00 $ 188.63 $ 41.67 $ 230.29  
2 $ 9,811.37 $ 189.41 $ 40.88 $ 230.29  
3 $ 9,621.96 $ 190.20 $ 40.09 $ 230.29  
4 $ 9,431.76 $ 190.99 $ 39.30 $ 230.29  
5 $ 9,240.77 $ 191.79 $ 38.50 $ 230.29  
6 $ 9,048.98 $ 192.59 $ 37.70 $ 230.29  
7 $ 8,856.39 $ 193.39 $ 36.90 $ 230.29  
8 $ 8,663.00 $ 194.20 $ 36.10 $ 230.29  
9 $ 8,468.80 $ 195.01 $ 35.29 $ 230.29  
10 $ 8,273.79 $ 195.82 $ 34.47 $ 230.29  
11 $ 8,077.97 $ 196.63 $ 33.66 $ 230.29  
12 $ 7,881.34 $ 197.45 $ 32.84 $ 230.29  
13 $ 7,683.89 $ 198.28 $ 32.02 $ 230.29  
14 $ 7,485.61 $ 199.10 $ 31.19 $ 230.29  
15 $ 7,286.51 $ 199.93 $ 30.36 $ 230.29  
16 $ 7,086.57 $ 200.77 $ 29.53 $ 230.29  
17 $ 6,885.81 $ 201.60 $ 28.69 $ 230.29  
18 $ 6,684.21 $ 202.44 $ 27.85 $ 230.29  
19 $ 6,481.76 $ 203.29 $ 27.01 $ 230.29  
20 $ 6,278.48 $ 204.13 $ 26.16 $ 230.29  
21 $ 6,074.35 $ 204.98 $ 25.31 $ 230.29  
22 $ 5,869.36 $ 205.84 $ 24.46 $ 230.29  
23 $ 5,663.52 $ 206.69 $ 23.60 $ 230.29  
24 $ 5,456.83 $ 207.56 $ 22.74 $ 230.29  
25 $ 5,249.27 $ 208.42 $ 21.87 $ 230.29  
26 $ 5,040.85 $ 209.29 $ 21.00 $ 230.29  
27 $ 4,831.56 $ 210.16 $ 20.13 $ 230.29  
28 $ 4,621.40 $ 211.04 $ 19.26 $ 230.29  
29 $ 4,410.36 $ 211.92 $ 18.38 $ 230.29  
30 $ 4,198.45 $ 212.80 $ 17.49 $ 230.29  
31 $ 3,985.65 $ 213.69 $ 16.61 $ 230.29  
32 $ 3,771.96 $ 214.58 $ 15.72 $ 230.29  
33 $ 3,557.39 $ 215.47 $ 14.82 $ 230.29  
34 $ 3,341.92 $ 216.37 $ 13.92 $ 230.29  
35 $ 3,125.55 $ 217.27 $ 13.02 $ 230.29  
36 $ 2,908.28 $ 218.18 $ 12.12 $ 230.29  
37 $ 2,690.10 $ 219.08 $ 11.21 $ 230.29  
38 $ 2,471.02 $ 220.00 $ 10.30 $ 230.29  
39 $ 2,251.02 $ 220.91 $ 9.38 $ 230.29  
40 $ 2,030.11 $ 221.83 $ 8.46 $ 230.29  
41 $ 1,808.27 $ 222.76 $ 7.53 $ 230.29  
42 $ 1,585.52 $ 223.69 $ 6.61 $ 230.29  
43 $ 1,361.83 $ 224.62 $ 5.67 $ 230.29  
44 $ 1,137.21 $ 225.55 $ 4.74 $ 230.29  
45 $ 911.66 $ 226.49 $ 3.80 $ 230.29  
46 $ 685.16 $ 227.44 $ 2.85 $ 230.29  
47 $ 457.72 $ 228.39 $ 1.91 $ 230.29  
48 $ 229.34 $ 229.34 $ 0.96 $ 230.29  
49 $ 0.00 $ 0.00 $ 0.00 $ 0.00  
 
say you jumped out of the intital loan at 24 months you would need a new loan for 5,456.83 refinanced at 3% over 24 months you would pay  
 
 
Loan payments:  
$5,628.99  
Balloon payment at end:  
$0.00  
Total payable:  
$5,628.99  
24 monthly payments of:  
$234.54  
Total interest:  
$172.16  
 
now you have to do the math to remove the last two years for payments from the first loan(277.76 interest- 105.60 difference) so depending on fees to switch and hassle maybe in this scenario $105 savings isnt worth it after two years in, of course the bigger the loan over longer, like a mortgage may be worth the switch, or a car loan with different numbers then i put in  
 
Edited by traveller, 2016-07-21 10:52:54