Dear EchoBay Expert:

Dear Loyal Reader: If you have a pre-computed interest loan, it is generally not a good idea to get an auto refinance loan. With a pre-computed loan, you are obligated to pay all of the interest owed for the full term of the loan even if you refinance the next day.

Compare this to a simple interest loan where interest accrues on the balance of the loan. With a simple interest loan, the earlier you pay it off, the more money you save. This is not the case with pre-computed loans. The earlier you pay off a pre-computed loan, the larger the hit your wallet will take.

In all likelihood, your pre-computed loan also uses the rule of 78s. In this case, you are paying even more interest up front. If you decide to pay it off early, the lender will calculate a "rebate" but it's really just a charge.

With the rule of 78s, a majority of the interest is paid in the early part of the loan term, because of this you are making very small reductions in principal. This in turn equals a large payment for you when you want to refinance the loan.

If you have signed for a pre-computed loan, generally the best advice is to stick it out. When you buy a new vehicle, be sure you are signing a simple interest loan so you can avoid this headache next time.

Dear EchoBay Expert:

Dear Loyal Reader: There are a number of auto refinance companies for you to choose from, including banks, credit unions and online lenders. While banks used to be the standard when it came to auto financing and refinancing, credit unions and online lenders have moved to the forefront of the auto refinance marketplace and tend to provide the best interest rates.

Credit unions are non-profit organizations and are able to charge a lower interest rate than banks can, although their application process is generally the same and it can take a long time to process the loan. If you're looking to refinance ASAP at the lowest possible rate, online lenders will probably be your best bet since their processing times are usually much quicker than both banks and credit unions and online auto refinance companies have very competitive interest rates due to their low overhead.

You can fill out the application from the comfort of your home and some online auto refinance companies even provide instantaneous approvals. There is one type of auto refinancing that you should avoid at all costs, and that is the buy-here-pay-here dealerships that offer refinancing programs. Refinancing with these less-than-reputable lenders will not get you a lower interest rate and will likely cost you a lot more money than your current auto loan arrangement.