I Saved Thousands by Refinancing My Car at a Credit Union

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Many of us have fallen prey to the pressures of a conglomerate car retailer, including myself. In 2011, I walked into a Toyota (TM) dealership with the sensible goal of simply checking out the merchandise. My lease was drawing to a close, and I wanted to see what my options were. Instead, I got caught up in the allure of shiny metal and, to my surprise, ended up leaving the lot with a new car.

Two years later -- after the excitement of new car keys clinking in my purse faded, along with that new car smell -- I realized that perhaps I hadn't made the best financial decision. I admitted my error and dealt with the mixture of guilt and frustration. Then I got motivated.

The first thing I did was consult a financial expert who specialized in car loans. I soon discovered that not only was I upside-down on my outrageous seven-year loan (yes, seven), I was going to overpay by thousands of dollars if I kept it. Knife to the wallet.

An Extreme Situation

Of course, paying extra in interest is part of the deal when you don't pay cash for a car. My situation was slightly more extreme, though, due to the length of my loan and my relatively high interest rate, which was non-negotiable at the time, thanks to Scion's funky set of rules.

So what's a gal to do when she feels the sharp claws of a corporation digging into her sensitive bank account? She does a bunch of research and evaluates all her options, that's what.

I started by Googling "car refinancing." Instantly, a bounty of bank's promising super-low rates populated my browser window. I began by checking out my own bank, JPMorgan Chase (JPM), and quickly learned that the fractional difference between the interest rate it offered and what I already was paying meant it wouldn't be worth the trouble of refinancing. Then, I followed the recommendation of my financial adviser and moved on to local credit unions, which offered the lowest rates across the board. Seeing those low rates felt sort of like Christmas.

Refinancing requires much paperwork and correspondence. After the monthlong process, I felt like I was basically BFFs with my loan officer. I even kind of missed those weekly emails and calls when it was all over. What I did not miss, though, was the too-high car payment and the overwhelming sense of fiscal doom I associated with it.

The 2.49 Percent Solution

By switching from a Toyota Financial Services loan to a car loan with Tempe Schools Credit Union (now Landings Credit Union), I reduced my interest rate from 5.95 percent to 2.49 percent. I didn't add extra years onto my car loan payments, which many people do to reduce their monthly payment. Instead, my loan concludes at the same time it would have otherwise. My monthly payment went from $341 to $315, savings $26 a month or $312 a year. By reducing my interest rate and not adding more years to my loan, I saved myself nearly two grand.

Let's do some additional (and painful for me) math. What would my total savings look like if I'd financed with the credit union to begin with? At 2.49 percent versus the 5.95 percent, we're looking at a difference of $5,300 in finance charges versus $2,100, a savings of $3,200.

Refinancing my car was a lot of work -- and I wouldn't have had to do it if I'd been smarter to begin with -- but I learned a great deal going through the process. I also feel empowered knowing I won't ever make the same mistake again, and dang if it doesn't feel good to save.

For those who feel in over their head on their car loan, reach out to your local credit unions to see if it makes sense for you to refinance with one of them. There are some stipulations -- including your car's age and your income -- and your new interest rate will vary depending on your credit score, but all that paperwork is absolutely worth it if you can save several thousand dollars.

Personally, if I could do it all over again, I'd have financed with a credit union to the first time around. I also would have purchased a used car instead of a new one. Regardless, I'm glad I did something about the situation eventually, and that doing so saved me a decent chunk of change. For anyone reading this, I urge you to be smarter than I was when you finance your next car (or your current one) and really look at those APRs. A few percentage points can really add up over time.

I Saved Thousands by Refinancing My Car at a Credit Union
  • MSRP: $26,495
  • Resale value retained after five years: 50.5 percent
Even under Fiat (FIATY) ownership, some elements of Dodge's mouth-breathing, knuckle-dragging, He-Man-Woman-Haters-Club approach to auto sales managed to survive. The built-by-car-guys-for-car-guys Challenger and its rebooted muscle car aesthetic still lingers to lure meatheads who value racing stripes and rims over, oh, just about any other element of their vehicle.

Ordinarily, that alone wouldn't make one of these vehicles worth a second look five years from now --  even among the most superficial gearheads. But Fiat helped the Challenger smarten up a little bit by coupling a 305-horsepower V6 engine or 375-horsepower 5.7-liter V8 Hemi with loads of interior space, real-time touchscreen navigation, traffic updates, Bluetooth connectivity,  Sirius (SIRI) XM satellite radio, keyless entry/starter and a whole lot of Harman Kardon audio upgrades.

Long after Harley goes electric and all the other performance ponies start closing in on 35 to 40 miles per gallon, these updates will make a 2014 Challenger worth a half-price look.
  • MSRP: $25,575
  • Resale value retained after five years: 50.6 percent

It's not as American-made as the competing Ford F-150 or Ram, but it did just get a facelift in 2014, its first since 2006. That tells you just how little GM likes to fiddle with the third-best-selling vehicle in the country.

Its new V6 engine increases the base Silverado's brawn to 305 horsepower, but only increases its highway mileage from 22 miles per gallon in the old model to 24 mpg in the 2014. Adding updates such as Chevy's MyLink audio system with color screen, USB ports and an audio jack on top of features including Bluetooth connectivity, OnStar telematics and Sirius XM satellite radio bring the cab up to date, though. The Silverado's payload and towing capacities have never been the problem. Its antiquated features were, and the updates are far easier to resell half a decade down the road.

  • MSRP: $23,120
  • Resale value retained after five years: 50.7 percent

For all of you just catching up, the five-passenger SUV is this generation's station wagon/minivan/super-sized SUV that it's going to drive to college with, throw kegs in back of and basically sully all fairly G-rated memories of its childhood with. T

To today's parents, however, it's almost as big a step toward parenthood as actually having a child. It represents the end of freewheeling youth and light packing and ushers in an era of school, soccer practice, summer vacation and snow days. After the popular crossover's 2012 overhaul, it's only made that transition easier by adding a leather interior, heated seats and rearview windows and navigation system with controls mounted on the steering wheel. Honda also trimmed fuel efficiency to a combined 27 miles per gallon while leaving all 70 cubic feet of cargo space untouched.

  • MSRP: $23,555
  • Resale value retained after five years: 51.9 percent

Let the gearheads fight over whether the Camaro or Mustang provide more power for the money. Among those two, the Camaro gets the upper hand with a 323 horsepower, 3.6-liter V6 engine that still gets 28 miles per gallon on the highway. It also comes with fog lamps, a rear spoiler and a top that drops in 20 seconds.

A color heads-up information display on the windshield, the MyLink app center with 7-inch color touchscreen and Pandora, a rear-vision camera and Apple (AAPL) Siri Eyes Free that lets iPhone users send text messages through voice commands are just some of the perks behind the muscle. With apps for roadside assistance and diagnostics, available navigation and a remote starter, the Camaro's a whole lot more than just looks and a motor.

  • MSRP: $26,200
  • Resale value retained after five years: 52.3%

Even with only 6 percent of the U.S. truck market compared with nearly 30 percent for Ford, General Motors and Chrysler, Toyota accelerates past the Detroit Three's pickups when it comes to resale value.

Toyota's created a niche market for pickups such as the Tundra and the Tacoma and has seen its U.S. truck sales grow almost 10% year-to-date. The Tundra, much like the Silverado, hadn't had an update since 2007. It got a makeover for 2014 that mostly involves giving it a bigger grille and sprucing up the interior with more comfortable seats and touchscreen-driven tech toys. A backup camera now comes standard, as does the Entune audio and information system with touchscreen and Bluetooth connectivity. The 4.0L V6, 4.6L V8 and a 5.7L V8 engines remain, as does the pokey combined 18 miles per gallon, but the payload, towing capacity and — above all — reliability are what give the Tundra such a huge following a half-decade after its release.

  • MSRP: $53,000
  • Resale value retained after five years: 53.5 percent

Chevrolet hadn't produced a Stingray version of this vehicle since 1986, but bringing back that iconic design for 2014 just boosted this car's resale value right through its retractable roof. The pace car of last year's Indianapolis 500, the Corvette delivers on its looks with a 6.2-liter small-block V8 engine that cranks out 455 horsepower.

Unless you're the one buyer who strips this beauty down to its absolute base, chances are you're also enjoying a package that includes a Bose 10-speaker surround-sound audio system; Sirius XM satellite radio with one-year subscription and HD radio receiver; color head-up display; memory package; navigation system; heated and ventilated seats with power lumbar and bolster adjustment; and a leather-wrapped dash.

  • MSRP: $32,820
  • Resale value retained after five years: 56.2 percent

The cars with the highest resale value are almost exclusively SUVs. The 4Runner are great examples of why. It's a mix of the big school and soccer shuttle families want and the bike and kayak hauler weekend warriors crave.

Sure, it only gets a combined 20 miles per gallon, but it's a tailgater's dream with a power outlet in the cargo space for hooking up a television or other electronic devices, nearly 90 square feet of cargo room and an optional sliding cargo deck. That last feature basically takes out the need for a folding table by providing counter space strong enough to hold 400 pounds of food and beverages.

  • MSRP: $22,395
  • Resale value retained after five years: 59.1 percent

It's loud, it's not terribly reliable, it sucks up gas at a combined 19 miles per gallon and it doesn't store a whole lot unless you get the stretched out Unlimited version. That said, nothing looks quite like it and nothing's an acceptable off-road substitute at this price.

The ground clearance and four-wheel drive come in awfully handy in miserable winter weather, while that removable hardtop makes it a sweet open-air ride in the summer. Car-buyers don't pick up a used Wrangler because they want to truck the kids around or make grocery runs. They buy it because they want a Jeep and all the frivolities that go along with it.

  • MSRP: $18,125
  • Resale value retained after five years: 61.9 percent

The Tacoma has taken this award 10 times for one big reason: You can pound on it all you want and it just keeps coming back for more. Durability is a big deal in the Tacoma's world, where car-buyers who don't feel they need all the size and strength of a Ford F-Series or Chevy Silverado are drawn to its off-road agility, flexible cargo options and easy handling.

At a combined 23 miles per gallon, the base model Tacoma gets the mileage of a small SUV without sacrificing any of its midsized truck power. When you're content with fetching big items from the hardware store or taking a load of leaf litter to the dump without flashing chrome or flexing muscle, this is the understated truck to buy, even if it's secondhand.

  • MSRP: $27,680
  • Resale value retained after five years: 70 percent

No other vehicle comes close to the ridiculous resale value of Toyota's odd-looking, amphibious landing vehicle of a midsize SUV.

Its available four-wheel-drive system, hefty 260-horsepower 4.0-liter V6 engine and 5,000 pounds of towing capacity are beastly, while its interior is made for messy adventures. Rubber floors and water-resistant seat fabric are made to withstand mud, ash and anything else you track in. Meanwhile, its has enough gauges to make sure you never get too lost on your backwoods outings. It's an outdoor workhorse without equal, which is why buyers will still pay dearly for it after a half-decade of rugged outings.

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