We bought it brand new in Ca. and was with a 10% apr.. We should have gotten a lower apr because we have great credit so we found a company to refinance it but is that really a good idea to refinance a car.. Our payment is currently 483 per month and would be nice to get a lower payment because I also just bought a truck but how does this work and what should I watch out for? Thanks for your help!
2007-06-01 07:07:01 · 6 answers · asked by jimmy h 4 in Cars & Transportation ➔ Buying & Selling
How much is the refinanced APR? Are they charging you a fee for refinancing with them? Is there a pre-payment penalty on your current loan? These are the questions that need to be answered before you can determine whether it's worth it or not.
10% is high for someone with excellent credit, but it's not terrible. The best rate you're going to get is about 6%, which might knock around $40/month off your payment, but if they're charging you a refinance fee, and/or your current lender charges a pre-payment fee (since a re-finance is essentially paying off one loan with another), it may not save you any money in the long run.
Also, don't get caught up in the "let's talk monthly payments" routine. If you refinance your loan to stretch it out to 60 months at the same APR, your monthly payment will be lower, but that just means you'll be paying even MORE interest over the life of the loan. That's why you should make sure you have answers to the 3 questions in the first paragraph before making any decisions.
2007-06-01 08:46:08 · answer #1 · answered by nevergonnaletyoudown 4 · 0⤊ 0⤋
Sit down and explain with black and white documentation why you see it the way you do. Do not make her get on the defensive of why she is not working etc...She more than likely dealing with a budget that is not working so well for her. One thing you did not include in your question is why she needs the money. If she is short for groceries and children's needs (even if you do not see them as needs) then she has a legitimate complaint. Ask her what other options you would have that you could work on together maybe cutting other bills or doing without something in order for both of you to get what you want. You may consider a line of credit on your equity if her concerns are legitimate, but would need an agreed upon plan on how that will be paid back. Good Luck to you.....if you loose the battle you can extend your loan for a few more years but pay an extra principle payment each year (even if you just add a little to each monthly payment to add up to an additional payment by the end of the year). This will save you on interest and build your equity much quicker than just making an PI payment.
2016-05-18 21:31:50 · answer #2 · answered by ? 3 · 0⤊ 0⤋
Well, if the new bank is willing to give you a lower rate for the same length as your remaining loan, jump on it! 10% is pretty high for someone with good credit.
You'll only spend more money if you pay for longer. Doing the math is simple...multiply your $483 per month by how many months you have left and you get a number. Multiply the new payments by how many months you'll have to pay, add in any closing costs, and you get a second number. If the second number is lower, refinance. :-)
2007-06-01 07:42:57 · answer #3 · answered by Ferret 4 · 0⤊ 0⤋
Although you might be able to lower your payments, especially with a longer loan, your total cost for the vehicle will increase. You would be paying interest charges twice because after 11 months you've already paid a disproportionate portion of the total interest. However, a longer loan exposes you to being upside down meaning that you'll have trouble trading or selling in the future. Unless you have GAP insurance, it also exposes you to having to come up with cash to pay off your loan if the vehicle is stolen or totaled in an accident.
I suggest sticking with your current loan. It's easier and cheaper in the long run.
2007-06-01 07:30:22 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Absolutely! Since you've already paid about 1 year of the loan, finance the remaining balance for 1 year less than your existing loan.
Assuming you'll get a lower interest rate, you'll get lower payments while the loan lasts exactly the same amount of time. Extending the loan time will only result in you owing more than it's worth if you ever sell it or wreck it.
2007-06-01 10:27:39 · answer #5 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
The finance companies love will love you for this if you do.
The major portion of interest on the loan has been paid, and you are just starting on the principle now.
It is a trade off- lower payments, and increased new interest.
A paid off car is great- pay it off with out the refinancing could prove to be cheaper in the long run.
2007-06-01 07:14:05 · answer #6 · answered by teamepler@verizon.net 5 · 0⤊ 2⤋