Doing a car refinance
Doing a car refinance
Hey just want to give everyone a heads up with the new low interest rates. I bought my car about 3 or so years ago when the rates were alot higher. I used to have a 6.9% and am in the process of getting it lowered to 4.42% by doing a refinance through another bank. The result is that its saving me $625total over the next 3 years or $17 a month. Anyone do this before?
On a house, yes. Car, no. If you bought it three years ago, you should be close to paying it off, not refi. The biggest problem is thay you may be extending the overall length of financing.
I refinanced my Z a few months after I bought, because my interest rate was 8.6%. My bank offered 5.54% at the time, so I did it. But like I said, that was within a few months of buying.
I'm not extending the loan, I'm actually a few month overpaid on the loan. It was a 6 year loan and i'm at the 3 year mark. I will be refinancing for the next 3 years on the loan.
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Joined: Apr 2009
Posts: 469
Likes: 5
From: McDonough, GA
I'm about to go to my bank friday and look into doing it to my Z ..
Got 7.65% interest b/c I had no credit at all last year (was 19 years old) .. parents cosigned ..
15 months later I'm 20, own a house, and a few other things on my credit history (all good) .. decent credit score
and the credit union I use for checking, savings, debit, and credit offers car loans from 3.75%
so I'm looking to possibly lower my payment about $50 / month .. and not extend the loan
Got 7.65% interest b/c I had no credit at all last year (was 19 years old) .. parents cosigned ..
15 months later I'm 20, own a house, and a few other things on my credit history (all good) .. decent credit score
and the credit union I use for checking, savings, debit, and credit offers car loans from 3.75%
so I'm looking to possibly lower my payment about $50 / month .. and not extend the loan
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
Last edited by FineWine; Aug 31, 2010 at 09:56 AM.
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Keep in mind that on your old loan, you were probably paying mostly principal at this point. Now, with the new loan, you're back to paying mostly interest.
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
Make sure the total amount of interest you owe on your current loan isn't less than starting over, even if it's a 3 year.
Keep in mind that on your old loan, you were probably paying mostly principal at this point. Now, with the new loan, you're back to paying mostly interest.
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
I did it for the cheap money factor. I was a bit into our loans but wanting to do home remodeling. Where else can you borrow money at 3.5%? So yes, I did end up paying more total interest on the car because of the interest schedule, but I can't borrow money at 3.5% interest through any other means.
I did my Z for the 72 month payment plan just to make a smaller monthly payment and knowing eventually i would save enough to lump sum it off. After 3 years i paid it all off and it was easier on me financially. To each his own i guess.
As per the refi, tough call, like others said, if you NEED to then do it, otherwise hang in there and and forget the $17 a month savings.
As per the refi, tough call, like others said, if you NEED to then do it, otherwise hang in there and and forget the $17 a month savings.
Registered User
Joined: Jul 2009
Posts: 118
Likes: 0
From: St. Louis
I just refinanced on my house I save 200 buck a month now. I pay more than I suppose to monthly on my car, I thinks its at 4.5 or 5%. Faster I get it payed off the faster I can get to modding.
Last edited by sanford; Sep 2, 2010 at 04:55 AM.
This is how it works, and this is WHY it will hurt you to do that so late in the process.
First 3 years or so you're paying off interest on the car. So after 3 years, w/e your rate was, even if 15%, you're prob already almost paid it off.
By doing another refinance, even thought they are saying you will save 15 dollars a month and then at the end you'll save a total of w/e amount - the way they calculate that is 15 times 36 payments left.
You will once again be back to paying 95% to interest and 5% to principal, means you'll be paying interest for another 2 years, and then start to pay off your car. You WILL pay more interest infact, and if something happens, or if you need to sell the car, trade it in, get in accident and insurance payoff- means you'll still owe a lot of your car.
Right now you'll be making payments almost 99% to the actually cost of the car, means 95 cents of the dollar are going to principal, why refinance to lower % when you already paid off the interest pretty much? Think about it, and do your own math. Its their job to have you look at one side of the coin, and the way they do math makes it seem good, but really, its not.
First 3 years or so you're paying off interest on the car. So after 3 years, w/e your rate was, even if 15%, you're prob already almost paid it off.
By doing another refinance, even thought they are saying you will save 15 dollars a month and then at the end you'll save a total of w/e amount - the way they calculate that is 15 times 36 payments left.
You will once again be back to paying 95% to interest and 5% to principal, means you'll be paying interest for another 2 years, and then start to pay off your car. You WILL pay more interest infact, and if something happens, or if you need to sell the car, trade it in, get in accident and insurance payoff- means you'll still owe a lot of your car.
Right now you'll be making payments almost 99% to the actually cost of the car, means 95 cents of the dollar are going to principal, why refinance to lower % when you already paid off the interest pretty much? Think about it, and do your own math. Its their job to have you look at one side of the coin, and the way they do math makes it seem good, but really, its not.
This is how it works, and this is WHY it will hurt you to do that so late in the process.
First 3 years or so you're paying off interest on the car. So after 3 years, w/e your rate was, even if 15%, you're prob already almost paid it off.
By doing another refinance, even thought they are saying you will save 15 dollars a month and then at the end you'll save a total of w/e amount - the way they calculate that is 15 times 36 payments left.
You will once again be back to paying 95% to interest and 5% to principal, means you'll be paying interest for another 2 years, and then start to pay off your car. You WILL pay more interest infact, and if something happens, or if you need to sell the car, trade it in, get in accident and insurance payoff- means you'll still owe a lot of your car.
Right now you'll be making payments almost 99% to the actually cost of the car, means 95 cents of the dollar are going to principal, why refinance to lower % when you already paid off the interest pretty much? Think about it, and do your own math. Its their job to have you look at one side of the coin, and the way they do math makes it seem good, but really, its not.
First 3 years or so you're paying off interest on the car. So after 3 years, w/e your rate was, even if 15%, you're prob already almost paid it off.
By doing another refinance, even thought they are saying you will save 15 dollars a month and then at the end you'll save a total of w/e amount - the way they calculate that is 15 times 36 payments left.
You will once again be back to paying 95% to interest and 5% to principal, means you'll be paying interest for another 2 years, and then start to pay off your car. You WILL pay more interest infact, and if something happens, or if you need to sell the car, trade it in, get in accident and insurance payoff- means you'll still owe a lot of your car.
Right now you'll be making payments almost 99% to the actually cost of the car, means 95 cents of the dollar are going to principal, why refinance to lower % when you already paid off the interest pretty much? Think about it, and do your own math. Its their job to have you look at one side of the coin, and the way they do math makes it seem good, but really, its not.
Thanks
Keep in mind that on your old loan, you were probably paying mostly principal at this point. Now, with the new loan, you're back to paying mostly interest.
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
It's a good idea if you NEED to do it, but if you're already half way into your loan, you might be hurting yourself since you've already paid most of the "cost" of the loan.
I had seriously considered refinancing my car to save a few per month when I realized this and decided to stick it out.
This is how it works, and this is WHY it will hurt you to do that so late in the process.
First 3 years or so you're paying off interest on the car. So after 3 years, w/e your rate was, even if 15%, you're prob already almost paid it off.
By doing another refinance, even thought they are saying you will save 15 dollars a month and then at the end you'll save a total of w/e amount - the way they calculate that is 15 times 36 payments left.
You will once again be back to paying 95% to interest and 5% to principal, means you'll be paying interest for another 2 years, and then start to pay off your car. You WILL pay more interest infact, and if something happens, or if you need to sell the car, trade it in, get in accident and insurance payoff- means you'll still owe a lot of your car.
Right now you'll be making payments almost 99% to the actually cost of the car, means 95 cents of the dollar are going to principal, why refinance to lower % when you already paid off the interest pretty much? Think about it, and do your own math. Its their job to have you look at one side of the coin, and the way they do math makes it seem good, but really, its not.
First 3 years or so you're paying off interest on the car. So after 3 years, w/e your rate was, even if 15%, you're prob already almost paid it off.
By doing another refinance, even thought they are saying you will save 15 dollars a month and then at the end you'll save a total of w/e amount - the way they calculate that is 15 times 36 payments left.
You will once again be back to paying 95% to interest and 5% to principal, means you'll be paying interest for another 2 years, and then start to pay off your car. You WILL pay more interest infact, and if something happens, or if you need to sell the car, trade it in, get in accident and insurance payoff- means you'll still owe a lot of your car.
Right now you'll be making payments almost 99% to the actually cost of the car, means 95 cents of the dollar are going to principal, why refinance to lower % when you already paid off the interest pretty much? Think about it, and do your own math. Its their job to have you look at one side of the coin, and the way they do math makes it seem good, but really, its not.
For example: 3 year loan on $15k at 3.5% interest
Payments are ~$440/mo for 36 months, totaling $823 in interest
Payment 1 is $44 interest, $396 principal
Payment 12 is $31 interest, $409 principal
Payment 24 is $17 interest, $423 principal
Payment 36 is $1 interest, $439 principal
Total interest is $823
After 12 months, one has paid $406 in interest or about half of it in 1/3 the loan duration
After 24 months, one has paid $723 in interest, or about 90% of it in 2/3 the loan duration
The numbers change, of course, based on loan amount, duration, original interest rate, and revised interest rate. I don't know a cheaper way to borrow money though, so I've refi'd 3 of our cars to fund other things.