View Full Version : How do I refinance a car loan?
Any tips and leads for online auto financing? I want to re-finance and pay off early, then get a SUV 4x4 as a 2nd car.
Nathan_Bell
03-24-10, 17:06
Not exactly answering your question, sorry.
Do you have any credit unions in your area that you can join? Some of them do things like that.
Go to a bank and tell them what you want. Try a few banks or credit unions to see who has the best deal. It will be a "used" car loan now. You may even talk to the people who carry the note now. They may do it for you. That is what I did 8 or 9 years ago...
PrivateCitizen
03-24-10, 18:10
I am not sure how refinancing would help you at this point toward your goal if it is to pay off the current vehicle.
Additional payments mid-cycle that go directly to the principle works great to make headway in paying off the loan.
Unless you have a really high rate or are looking to just lower payments to make room for a new buy in the budget you probably don't a refi (unless it FORCES you to pay, I suppose).
I am not sure how refinancing would help you at this point toward your goal if it is to pay off the current vehicle.
Additional payments mid-cycle that go directly to the principle works great to make headway in paying off the loan.
Unless you have a really high rate or are looking to just lower payments to make room for a new buy in the budget you probably don't a refi (unless it FORCES you to pay, I suppose).
high interest rate!
The creditor basically just buys the current balance of the old loan. Credit unions are great for this.
You may not actually have to "refinance" it. If you can get a personal loan from you bank with a better interest rate it will be the same thing. If the car has any real value you can use it as collateral. Yes banks and credit unions are good places to look for loans, you might also check your insurance company, I know state farm does auto loans.
mnagant762
03-25-10, 04:24
The only thing you might have trouble with is the value of the vehicle versus what they will finance, I'm kinda in the business and I talk to people all the time who want to refinance but the banks won't touch it because the vehicle is not worth what is still owed on it. Just call your finance company see what the payoff is on the vehicle and then check the Kelly Blue Book to see what it's worth.
I personally would NEVER refinance a car. I pay cash nowadays but I cringe when people refinance automobiles. My in-laws do it all the time to save a couple tenths and don't really understand what they are doing. When you finance a car you pay most all of your interest up front. Say you have a $500 a month car payment for instance. Your first payment would be $499 towards interest and $1 towards principal... or paying the actual car off. The second payment would be $498 towards interest and then $2 towards the principal. Now, these are round numbers to give you an idea how it works so don't jump on me for exact figures because there are too many variables but for conversation sake this gives you an idea of how car loans work. So, if you have a car loan for 5mos you may pay over $1000 in interest and less than $100 towards the principal so your savings are nonexistant because you're paying like 90% interest on your first payments and that number slowly decreases over the life of the loan to reach your agreed interest rate. If you're going to pay the car off just pay it off. If you MUST refinance to lower payment because of some sort of emergency and you're going to lose your car or your credit or whatever then do it. If your goal is to save money or lower your payment a little just because then don't do it. You won't save any money.
I personally would NEVER refinance a car. I pay cash nowadays but I cringe when people refinance automobiles. My in-laws do it all the time to save a couple tenths and don't really understand what they are doing. When you finance a car you pay most all of your interest up front. Say you have a $500 a month car payment for instance. Your first payment would be $499 towards interest and $1 towards principal... or paying the actual car off. The second payment would be $498 towards interest and then $2 towards the principal. Now, these are round numbers to give you an idea how it works so don't jump on me for exact figures because there are too many variables but for conversation sake this gives you an idea of how car loans work. So, if you have a car loan for 5mos you may pay over $1000 in interest and less than $100 towards the principal so your savings are nonexistant because you're paying like 90% interest on your first payments and that number slowly decreases over the life of the loan to reach your agreed interest rate. If you're going to pay the car off just pay it off. If you MUST refinance to lower payment because of some sort of emergency and you're going to lose your car or your credit or whatever then do it. If your goal is to save money or lower your payment a little just because then don't do it. You won't save any money.
Uhmm, no. It is true that you pay more interest up front because your balance is bigger, so your flat payment is mostly interest. However, the interest is on the balance at any given time. It is not weighted to pay all the interest up front. It just seems like it because of how a flat payment works. You do pay more interest up front because the balance is bigger but not because of any weighting
So, 1/2 way through your payments, your balance is still going to be a significant amount and you will be paying interest on it.
I know interest is compounded, but using a simple interest approximation, if your balance is $15000 after 1/2 your payments, an interest rate of 7% versus say 5% will lead to interest charges for one month of about
7% -- $87.50 (7/12/100 * 15000)
5% -- $62.50 (5/12/100 * 15000)
Due to compounding you probably will save a bit more than the shown $25. But that is still a $25 savings in how much interest you are charged for that month, approximately (like I said, I used simple interest to estimate which is not exact but it should be close). The savings will be less each month since the balance is going down each month, but they are still savings.
So if you can painlessly refinance down a couple %-points then it is worth your while. I would still make extra principal only payments to knock it down faster and the savings won't be as great as refinancing your house since the terms are much smaller.
The above is based on a normal loan. If you have a screwy loan where the interest really is weighted to the front etc than this may not apply. But most loans are normal loans where interest is calculated each month on the balance (using compounding formulas not simple interest)
If you have a friend at a dealership he can do it for you. I don't recommend it but it is possible. Its a PITA because to refinance you will need to payoff the current loan and get the title so that the new bank will fund the new deal. Depending on the bank it can take weeks or longer to get your title so they will be out the cash until they get funded.
If you have a friend at a dealership he can do it for you. I don't recommend it but it is possible. Its a PITA because to refinance you will need to payoff the current loan and get the title so that the new bank will fund the new deal. Depending on the bank it can take weeks or longer to get your title so they will be out the cash until they get funded.
This is why it is best to see if the existing note holder will do it for you. The one time I have done it that is how I did it.
This is why it is best to see if the existing note holder will do it for you. The one time I have done it that is how I did it.
Missed that. Yes, that would be the best way to go and there are some that will do it. Generally they will want to reduce the term not extend it. YMMV
As far as the interest comments... Car loans are simple interest loans no different than your home loan. If you pay it off early your cost of capital goes down...
The only thing you might have trouble with is the value of the vehicle versus what they will finance, I'm kinda in the business and I talk to people all the time who want to refinance but the banks won't touch it because the vehicle is not worth what is still owed on it. Just call your finance company see what the payoff is on the vehicle and then check the Kelly Blue Book to see what it's worth.
Kinda like mobile homes. They want money down or you to put up land........... I asked when my sister was getting her's, "So you mean the trailer wont stand good for itself?" I was asked to wait outside.:D
LockenLoad
03-25-10, 21:29
high interest rate!
is your credit rating any better, than when you got the first loan, do you make more money now?
I thought about doing this, but then I realized I would not be getting a better rate than the 1.9% I have now thru GMAC. Was a GM Loyalty rate I got thru my dad 3 years ago. Ive got a bout $3500 of the $7100 left so I think Im gonna try to pay it off by the end of the year.
But I would go the personal loan route if I were going to do anything. Would probably get you a better rate.
I thought about doing this, but then I realized I would not be getting a better rate than the 1.9% I have now thru GMAC. Was a GM Loyalty rate I got thru my dad 3 years ago. Ive got a bout $3500 of the $7100 left so I think Im gonna try to pay it off by the end of the year.
But I would go the personal loan route if I were going to do anything. Would probably get you a better rate.
An interest rate that low it makes no sense at all to pay off early or even make bigger payments. You can make more money by putting money in a money market/savings account and collecting interest.
yea, I know, I just hate having monthly payments, so I wanna pay it off as soon as I can. Just want to eliminate 1 more thing I have to be paying for ya know?
Any tips and leads for online auto financing? I want to re-finance and pay off early, then get a SUV 4x4 as a 2nd car.
If you want to pay it off early, I don't see how refinancing would be a big help unless the original loan was at a very high interest rate. Double up on the payments or more.
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