Paying off a car loan, with another loan?

[truflip]

I currently have just a little over $13000 left to pay off on my car and since January of 2007, I've paid $890 in interest. My rate is 4.9% which is quite high and it seems Honda does not penalize you if you pay off the remaining balance early (other places will charge you the full terms interest no matter what)

I was thinking of getting a loan of some sort from a bank to pay off my balance since their rates are lower and figure I could save several hundred dollars going this way. Is this a viable plan?

Thanks in advance!

[Jucius Maximus]

Wait, is this the kind of car financing loan where the interest over the entire term is amortized into each payment from the very start, so that even if you pay it faster, you are not saving on interest?

Or does the interest build up monthly on the remaining principal?

If it's the former, the only advantage to refinancing is that there's no longer a lien on your car (if you can get an unsecured loan. I used Citi MC 0% for a similar deal.) No benefit in paying it off faster other than being out of debt and not being at risk of losing the car if you have a cash flow problem. If it's the latter, then refinancing may save you a bit.

[truflip]

I'm thinking it's the latter according to my statements but I'll contact HFS just to make sure. Right now, every little bit counts :)

[mart242]

The loan from the bank, what rate will it be? You realyl think that it will be less than 4.9%? I doubt it..

[rems]

Wait, is this the kind of car financing loan where the interest over the entire term is amortized into each payment from the very start, so that even if you pay it faster, you are not saving on interest?

Or does the interest build up monthly on the remaining principal?

If it's the former, the only advantage to refinancing is that there's no longer a lien on your car (if you can get an unsecured loan. I used Citi MC 0% for a similar deal.) No benefit in paying it off faster other than being out of debt and not being at risk of losing the car if you have a cash flow problem. If it's the latter, then refinancing may save you a bit.

When you amortize a loan, you make equal payments every month that includes principal and interest. As you pay off more of the loan, the principal portion just goes up. I've never heard of paying interest in advance. Interest is a function of time. So how can interest be accrued if time hasn't passed? You only owe the lender the outstanding principal amount.

[Faeton]

Don't confuse the Bank of Canada's interest rates with consumer interest rates from banks. To get a loan below 5% right now is really hard

[Stock R]

the loan from the bank, what rate will it be? You realyl think that it will be less than 4.9%? I doubt it..

+1

[magnodrome]

a bank loan will be greater than 5% pending on your credit score and rather the loan is secure or not.

The best way is to use your line of credit to pay off your loan and you make weekly or bi-weekly contribution to pay off your line of credit.

[truflip]

The loan from the bank, what rate will it be? You realyl think that it will be less than 4.9%? I doubt it..
I didn't know that. Sorry!
Don't confuse the Bank of Canada's interest rates with consumer interest rates from banks. To get a loan below 5% right now is really hard
I definitely was confused. I appreciate your input.
a bank loan will be greater than 5% pending on your credit score and rather the loan is secure or not.

The best way is to use your line of credit to pay off your loan and you make weekly or bi-weekly contribution to pay off your line of credit.
Ill look into getting my own LOC. Thanks very much guys (and gals, if any)!