Make the most of cheap money


So gushes an e-mail item that floated into my box. Junk mail, to be sure, but it does touch a nerve: Are you a sucker because you’re paying too much interest?

An owner-operator buying a new or used truck should benefit from a low-rate loan, says Doug Kozeny, vice president of Truckers Professional Services in Omaha. “If they have a financial relationship with a local lender and a good credit history, there’s no reason they should be paying double-digit interest to a national lender,” he says. Clients were getting truck loans at 11 or 12 percent a year ago; now similar loans are as low as 7.9 percent, he says.

Even refinancing a truck loan, while rare, isn’t out of the question, Kozeny says, as long as you’re not “upside down” – owing more than the truck is worth.

If you’re not shopping for a truck, you can take advantage of low rates in other ways:

REFINANCE YOUR HOME. In late November, fixed rates for a 30-year mortgage hit a three-year low, around 6.5 percent, and 15-year fixed rates were down to 6 percent. Should you bite? The old rule of thumb is to have a spread of at least 2 percentage points between your current rate and the new rate, partly to cover closing costs, but let your lender evaluate your particular situation.

If you can’t make ends meet and have substantial equity in your home, you could refinance to a new 30-year mortgage simply to lower your note. Understand, though, you’ll pay thousands of dollars more in interest.

REDUCE YOUR CREDIT CARD BURDEN. Assuming your credit is good, you could gain from switching your credit card balance to a new card, but read the fine print. A great balance-transfer deal has a low rate, no fees attached and an introductory period of at least six months.

Another balance-transfer method is to pay off the credit card with a home equity loan. Those rates have come down to 7 percent to 7.75 percent and in some places are lower. Just be cautious about your repayment outlook; you don’t want to risk losing your home.

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BUY A NEW CAR. Now’s a great time. Ford, General Motors and DaimlerChrysler extended interest-free loans into January and may have extended them further since press time. Used-car loans are not very responsive to swings in the prime interest rate, so don’t expect much of a break there.