A refinancing loan, like all loans, comes with interest. The interest rates a lender charges for a refinancing loan vary and change over time, but are usually expressed as annual percentage rate, or APR. This is a measure of the total percentage of interest charged during a year. If you're in the market for a refinancing loan, you should always compare loan rates so you can secure the most competitive loan.
Mortgage Refinance
One common form of refinancing loan is mortgage refinancing. These loans typically come in several forms, such as a 15-year loan and 30-year loan. According to Bankrate.com, the average rate for a 30-year mortgage refinance as of April 3, 2011, was 4.86, up slightly from the prior week's average of 4.83 percent. The average rate for a 15-year mortgage was 4.05 percent, up from the prior week's average of 4.02 percent.
Car Refinance
Like mortgages, consumers can also refinance a car purchase to take advantage of lower interest rates. Car refinancing loans typically come in 36, 48 or 60-month periods. According to Bankrate.com, the average interest rate for a 36-month used car loan on March 3, 2011 was 4.95 percent, down from the previous week's 5.48 percent average. The average rate for a 48-month used car loan was 5.41 percent, up from the previous week's 5.39 percent average.
Borrower Variation
While the national average interest rate for any refinancing loan differs over time and between lenders, each lender also has a range of interest rates it offers borrowers. Creditors give the best interest rates to borrowers with the best credit histories, while those with bad credit get higher rates. If a credit union offers 60-month new car loans ranging from 3 percent interest to 17 percent interest, borrowers with bad credit would likely receive the higher rates, while the lowest rates go to those with excellent credit.
Other Factors
When you refinance or obtain any loan, the interest rates depend largely on conditions outside of your control. Even if you have a great credit score and reliable income, you have the Federal Reserve System to thank (or not thank) for your rate. When the Fed lowers or raises interest rates, so do lenders. Because of this, the best time to refinance a loan is when the Fed cuts the interest rates it offers to institutional lenders.
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