NONSTARTER - refinancing automobile loans

Kiplinger's Personal Finance Magazine, May, 2001 by Ed Henry

Q&A Doest it ever make sense to REFINANCE AN AUTO LOAN?

With all the talk about people cashing in on lower interest rates by refinancing their home mortgages, I was wondering: Would I save by refinancing my auto loan?--SAMUEL FRITTS, Cary, N.C.

Probably not. Although new-car loan rates have fallen slightly--from an average of 9.7% in September to 9.3% in March--refinancing would mean switching into a used-car loan. And used-car loans normally carry a higher rate, about one percentage point higher for three-year loans right now, according to Greg McBride of Bankrate.com. Even if you could slip into a lower rate than the one you are currently paying, fees on the transaction could devour your savings.

Most banks don't charge penalties for paying off an auto loan early, but loan-initiation fees could run as high as $150, says Andrew Trainor, president of Community Bank of Southern Colorado. Changing the lender's name on your title might add $15 or so to the cost. You need to compare such costs to the savings you could reap from a lower interest rate over the life of the loan. And speaking of the life of the loan, be careful not to stretch out the time over which you'll be paying for your car. If you're halfway through a three-year loan and refinance with another three-year loan, you'll wind up paying interest for an extra 18 months. That's almost sure to cost you more interest even if you find a significantly lower rate.

Top-Yielding Money-Market Mutual Funds

                                   30-DAY YIELD     MIN.
Taxable                            TO MARCH 7      INVEST.

1. Harbor(*)                          5.70%        $1,000
2. Transamerica Premier(*)            5.69          1,000
3. Fidelity Cash Reserves             5.68          2,500
4. McM Principal Preservation(*)      5.68          5,000
5. Strong Investors(*)                5.68          1,000
   NATL AVERAGE                       5.15%

                                     WEB ADDRESS         TOLL-FREE
Taxable                                (WWW.)              NUMBER

1. Harbor(*)                        harborfund.com      800-422-1050
2. Transamerica Premier(*)         transamerica.com     800-892-7587
3. Fidelity Cash Reserves            fidelity.com       800-343-3548
4. McM Principal Preservation(*)           #            800-788-9485
5. Strong Investors(*)                estrong.com       800-368-3863
   NATL AVERAGE

                                       TAX EQ. YIELD
                        30-DAY YIELD       28%/31%       MIN.
Tax-free                 TO MARCH 7        BRACKET      INVEST.

1. Strong Municipal         3.73%         5.2%/5.4%     $2,500
2. Strong Tax-Free          3.68           5.1/5.3       2,500
3. Vanguard                 3.49           4.8/5.1       3,000
4. Calvert                  3.43           4.8/5.0       2,000
5. USAA                     3.37           4.7/4.9       3,000
   NATL AVERAGE             2.92%         4.1%/4.2%

                          WEB ADDRESS       TOLL-FREE
Tax-free                     (WWW.)            NUMBER

1. Strong Municipal      estrong.com      800-368-1030
2. Strong Tax-Free       estrong.com      800-368-1030
3. Vanguard              vanguard.com     800-635-1511
4. Calvert             calvertfunds.com   800-368-2748
5. USAA                       #           800-531-8448
   NATL AVERAGE

(*) Fund is waiving all or a portion of its expenses.

(#) Rates not available on Web site

SOURCE: Money Fund Report, iMoneyNet Inc.,
One Research Dr., Westborough, MA 01585; 508-616-6600;
http://www.imoneynet.com
Top-Yielding Certificates of Deposit

                                       RECENT          MIN.
6-month                              ANN. YIELD       AMOUNT

1. Resource Bank  (Va.)                 5.81%        $10,000
2. IndyMac Bank (Cal.)                  5.80          10,000
3. Giantbank.com (Fla)([dagger])        5.75           2,500
4. Nexity Bank (Ala.)([dagger])         5.70           1,000
5. Southern Pacific Bank (Cal.)         5.65           5,000
   NATL AVERAGE                         4.45%

                                  WEB ADDRESS          TOLL-FREE
6-month                             (WWW.)               NUMBER

1. Resource Bank  (Va.)     resourcebankonline.com   877-726-5463
2. IndyMac Bank (Cal.)          indymacbank.com      800-734-6063
3. Giantbank.com
     (Fla)([dagger])             giantbank.com       877-446-4200
4. Nexity Bank
     (Ala.)([dagger])           nexitybank.com       877-738-6391
5. Southern Pacific
     Bank (Cal.)                  spbank.com         800-428-5056
   NATL AVERAGE

                                      RECENT       MIN.
1-year                              ANN. YIELD    AMOUNT

1. Guardian Savings (Tex.)             5.75%      $1,000
2. BankDirect (Tex.)([dagger])         5.70       10,000
3. Chattahoochee National (Ga.)        5.65        1,000
4. Giantbank.com (Fla.)([dagger])      5.65        2,500
5. Capital One (Va.)                   5.65       10,000
   NATL AVERAGE                        4.53%

                                       WEB ADDRESS         TOLL-FREE
1-year                                   (WWW.)              NUMBER

1. Guardian Savings (Tex.)         guardiansavings.com    800-727-3195
2. BankDirect (Tex.)([dagger])       bankdirect.com       877-839-2737
3. Chattahoochee National (Ga.)     bankthehooch.com      877-881-2621
4. Giantbank.com (Fla.)([dagger])     giantbank.com       877-446-4200
5. Capital One (Va.)                 capitalone.com       800-564-7426
   NATL AVERAGE

                                RECENT         MIN.
5-year                         ANN. YIELD     AMOUNT

1. Key Bank (Ohio)               6.02%        $ 5,000
2. Discover Bank (Del.)          6.02          10,000
3. American Bank (Pa.)           6.00             500
4. Providian Bank (Utah)         6.00          10,000
5. Cross Country Bank (Del.)     5.97           5,000
   NATL AVERAGE                  4.89%

                                  WEB ADDRESS           TOLL-FREE
5-year                               (WWW.)               NUMBER

1. Key Bank (Ohio)                 keybank.com         800-872-5553
2. Discover Bank (Del.)         discovercard.com       800-347-7000
3. American Bank (Pa.)            pcbanker.com         888-366-6622
4. Providian Bank (Utah)          providian.com        800-414-9693
5. Cross Country Bank (Del.)  crosscountrybank.com     800-334-3180
   NATL AVERAGE

([dagger]) Internet only

(#) Rates not available on Web site

SOURCE: [C] 2001 Bankrate.com, a publication of Intelligent Life Corp.,
11811 US Highway 1, N. Palm Beach, FL 33408; 800-327-7717,
ext. 290; www.bankrate.com
Yield Benchmarks

                                  RECENT      MONTH-AGO    YEAR-AGO
Bonds & Treasuries                 YIELD       YIELD        YIELD

U.S. series EE savings bonds       5.54%(*)    5.54%(*)     5.19%
U.S. series I savings bonds        6.49        6.49         6.98
One-year Treasury bills            4.27        4.69         6.17
Five-year Treasury notes           4.60        4.81         6.50
Ten-year Treasury notes            5.30        5.03         6.29

(*) For bonds purchased after May 1, 1997; 5.36% for bonds
purchased earlier.