Your Questions About Car Refinance Loan
Thomas asks…
Should I refinance my car loan, given these details?
I was a first time car buyer on August of 2006 when I purchased my 2002 VW Jetta. I put my name and my spouses name on the car when we financed it through the dealership at a rate of 10.45% (we were told it was a good rate for first time purchasers). I have been making all payments and we just recently checked our FICO credit score which was 790 and 780. We have about 11,000 left on the loan and were deciding on if we should refinance, or maybe trade it in?????
Steve answers:
With your good credit score, you might be able to get down to about 7.5% (according to Bankrate.com for used cars) and you can check how much it will affect your payment with the following calculator:
http://www.autoloancalculatoronline.com
I doubt that it will lower your payment significantly unless you spread out the loan and make it longer, which will likely put you into an upside down situation.
You may already be upside down and may find it hard to get another loan (“refinance”) without a down payment to reduce your negative equity.
Refinancing will result in higher overall financing costs for the two loans. A large portion of your payments so far have gone to interest, which is the way loans are designed. So you’ve already paid a good portion of your total interest on your current loan. Your future payments will go more and more toward paying down the principal. If you get a new loan, you start all over again, paying lots of interest up front and little toward principle.
In short, you may be able to lower your payments by refinancing but you’ll increase your total finance costs, probably have to extend your loan, and become upside down on your loan.
Being upside down is not good if you want to sell or trade (or refinance) before the loan is paid off. It also exposes you if your car is stolen or totaled in an accident. Your insurance will only pay what the car is worth at the time of the accident, not what you still owe on your loan. The difference can easily be thousands of dollars.
Ruth asks…
where is the best place to refinance a car loan?
If credit unions are best, do they offer that on the trade in value or on the retail value of the vehicle?
Steve answers:
Bill is generally correct. A credit union is the best place because they offer the best rates.
My credit union will refinance up to 90% of nada book value.
If you owe more than the nada vehicle worth, you will not be able to refinance or you will have to come up with some sort of down payment to qualify.
EDIT – They base it on the retail value.
Mandy asks…
Are there any banks that will refinance a car loan with a car that has more then 70000 miles?
I’ve had no luck finding one that will. I have a 2008 Honda civic lx w/74000 mil.
Steve answers:
Yes, but it depends more on your credit.
Credit unions may let you too.
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Your Questions About Auto Refinance Loans
Robert asks…
places that refinance auto title loans?
Steve answers:
Many financiers. Try refinance auto loan on google.. 
Mary asks…
threatening to refinance the auto loan but we are both on the loan and title of the car!?
hello, i have a question here. if two people are listed on the loan and the title of the auto loan, can one refinance the car or take the car w/o the other persons approval if two people are legally the owners? what if one is the co-signer?
this is what happened. we switched the names around on the loan so that i could get a better rate, therefore making me the co-signer. i will be making the payments on the car. he keeps telling me that he can take the car and refi or keep the car because he can make the payments on it. but both of our names are on the title and the loan but me as the co-signer on the loan. now hes threatening to refinance the loan and take the car back from me and i wanted to know if this was legal. where can i get some free legal advice incase he tries to get the car?
i guess i should add that nothing is past due. i make all the payments. the insurance is in my name which i dont think carries any weight. i think he’s just dangling it over my head that he could take it anytime for any reason
Steve answers:
If both are listed as joint primary owner then both must agree, or one part must buy out the other share of the car.
If on the other hand one of the parties is only listed as a co-signer, thy only have right to the car if the other does not make payments on it. A co-signer is only some one who guaranties to pay the loan if the primary signer fails to do so.
David asks…
If you refinance your auto loan, will you receive the pink slip?
What about if you apply for a personal loan and pay off your vehicle? Will that result in you receiving the pink slip?
Steve answers:
No, if you refinance youre just getting a new loan at a new rate. But if you get a personal loan and pay off the car you will get the pick slip and now owe the bank who gave you the loan.
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Your Questions About Car Loan Refinance Options
Michael asks…
Options for down payment to refinance my car?
I would like to refinance my loan on a 03 Monte Carlo that is currently at $13,800 with approx 48 months left. Interest is at 15.5% (Outrageous) I know with $440.00 monthly payments (No credit history at time of purchase with a friend as cosigner resulting in high interest). I would like to refinance but on Kelly Blue Book the car value is at 10350.
I know I have to put money down but right now I can only put down 2000 which would still leave the bank giving me more than it is worth which seems to always get shot down.
What would you guys advise to do? I have thought about opening a credit card and putting the difference on the card in order to get a low APR and save a bunch of money on interest from the car loan but am not sure if there’s other ways that I haven’t looked at.
My credit score hovers around 700 if that matters.
Thanks!
To Alfred: Thanks for your answer, or comment rather. Although this is something that I am not struggling to pay it would have just been nice to lower the interest, I am still going to pay 440 a month.
Steve answers:
Pick up 2nd job delivering pizzas and save up that down payment.
Buying that car, which you really had no biz buying, was dumb. Now, you need to make up for that mistake with some sweat.
I want extra parmasean cheese when you bring my pizzas, too. Thanks.
Sharon asks…
should i refinance my car loan?
I’m thinking about refinancing my car loan.. I originally got the car in Jan 2010 so it’s been about a year worth of consecutive payments. The balance now is about 10775.00 give or take, and I was approved for 10.99% interest, my current interest is really high about 21% (I had one blemish on my credit, a recent repo due to my mother not paying for a car i co-signed for).. so 10.99% sounds alot better.
I have 2 options
1) 66 months, payments approx $230-$235
2)78 months, payments approx $215-225
I’m currently paying $290 and have 5 remaining years.
I would hate to add a whole new year to the loan but $220/month does sounds attractive, and I would also most likely pay more towards it when i have the money like $250/month to shorten the term.
I understand the term is high, that’s why I mentioned I was going to be paying extra to shorten the term. My term was high regardless.. I still had an additional 5yrs left right now.. I don’t have extra money to pay towards this, the reason i’m refinancing is b/c I need more money to pay my bills, contrary to your sarcastic comment about removing a fancy phone from my budget, I don’t have anything in my budget that I can remove, except refinance on things like this. I understand I will be paying on this for a long time and I def don’t want to.
Steve answers:
If you can save 10% do it. The interest savings alone are worth the extra year.
Mandy asks…
I owe $16,000($540/month) on a car worth $11,000. What are my options for getting lower monthly payments?
Can I sell the car and refinance what is left of my loan? Should I refinance the current loan? Are there any other options?
Steve answers:
If you sell the car, you either have to sell it for $16k or sell it for what you can and pay the difference to the lender. You can’t sell it and still owe money on it because you can’t transfer ownership to the new buyer. You might be able to refinance the current loan, but it will be hard with $5000 of negative equity.
Seriously, the best thing for you to do is suck it up and keep making the payments. At some point, the vehicle will be worth more than is owed on it and you’ll have more options.
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Your Questions About Auto Loan Refinance
Chris asks…
What is the best way to refinance an auto loan?
We just bought a car today with a high apr, we used the dealer’s financing. We have a great credit history however our ‘auto‘ credit score is lower than our overall score. What is the best way to refinance an auto loan? Is there a way for us to repair our auto credit score, if so, how?
Steve answers:
Check with a local credit union for accurate advice.
Good luck.
Ken asks…
Why will noone approve me for an auto refinance loan?
I have a decent credit score (650-700), lived at my resident long enough, been at my job long enough (almost 2 years) and make more than enough money to get a loan. I have paid on the car for 7 months on a 6 year loan. The interest rate is over 20% right now and have an excellent payment history on all my accounts/credit cards. So far, most reputable financing companies have rejected me online. I will soon go to banks and credit unions. Any suggestions?
Steve answers:
Your best bet is to go to a credit union first- they tend to be more lenient and offer better rates, usually. What you are describing about your situation does not add up at all. If you really have 650-700 for a score, been at your residence for 3 years, had a STABLE employment history for at least 2 years and make more than enough money- you sould have a much lower interest rate.
Also, a good place to check is…
Http://www.knowledged.info/go.php?link=auto
Hope that helps.
Nancy asks…
Where is the best place to refinance my auto loan?
When I first got my auto in March 2006 my interest rate was 17.9% I refinance in September 2006 with E-loan for a rate of 11.04% we recently bought a home and our finally establishing some credit. So I think its time to refinance again. Does anyone recommend a great place to get a great rate?
Thanks I really appreciate it!
Steve answers:
Why not use E-loan again?
Realize that interest rates have risen during the past 2 years and with your mortgage, you may not be able to do better than 11%. Plus, your car has continued to depreciate and there may not be any equity remaining for a refinance. Just be happy with what you have and make timely payments until the balance is $0.
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Your Questions About Car Refinance Tips
Susan asks…
I need a car. What am I supposed to do?
Me & My husband have bad credit & no one will finance us. We are working on our credit but that will take a few months & we have a baby coming in May & we need a car before then. We are just like a million other people & cant just go pay cash for a car so we have to finance it. We are looking at cars in the 12k-15k range & have about $5000 to put down. Neither one of us have a co-signer that we could use. We understand that we will have a payment & high interest rate & we are ok with that because we will refinance after a few years. Any tips or advice would be greatly appreciated. We are desperate! Thanks!
A $5000 car it just what it is a $5000 car & I dont want to buy something that is going to breakdown on me in 6 months with me & my baby. Ive been there done that & im not going to do that again. So thats why im choosing a more expensive car & it needs to be financed.
I have little or basically no credit because im only 21 & my husband’s credit is messed up because of his divorce. We are both trying to improve our credit & it is SLOWLY getting better. We do care about our credit but every one makes mistakes & in my case Im trying to build my credit buts its hard!
Steve answers:
I have the same problem, your down payment is enough to get you a car.
To get a “new” one for the best price:::
Look for cars that were dealer cars. I’m getting an ’08 Scion that has an MSRP of $16,600 base for $12K! Its brand new, only the dealer drove it 8K mi, and it has extras. With your down payment, a $16K car with an average interest rate is a $240/mo payment.
Look on http://autos.yahoo.com, http://usedcars.kbb.com. You just type in what model/make, year range, your price range and miles and they give you a list of what’s in your area. Easy as cake. I wouldn’t bother going to the dealership until you know exactly what you want and can afford.
Don’t be afraid to haggle no matter what your credit.
Donald asks…
I co-signed on my soon to be ex-wife’s car.I owe $18k on a blue book $6k car.How can I get my name off that?
And the worse part….it’s a Saturn! I need to have her refinance this or something. I am responsible for the loan. If I don’t pay it, I have bad credit, and she gets to drive it. It is a joint loan, so legaly, she has as much right to drive it as I do. Tip to the guys out there: never do this.
Steve answers:
Are you a “co-signer” or a “co-buyer” ? If your name is on the title & registration then you are a “co-buyer”
This could make a difference in the assets & liabilities portion of your divorce.
In either case you need to talk to your divorce lawyer about making it part of the divorce decree, it is a major liability to you & can only hurt your credit.
Assets AND liabilities should be COMMUNITY PROPERTY, & dealt with as such.
Note to you: your “tip to guys” also applies to the many “gals” who are also co-signing for their ‘less than perfect credit’ husbands &/or soon to be ex’s. It DOES go both ways.
Mandy asks…
I need to write a cover letter to the bank and am terrible with words! Help please!?
The bank has asked for a cover letter explaining what we want to do.
We want to refinance our house and use the equity to pay out our car loan and personal loan. Can anyone give me some tips on how to write it. Mine sounds so bland. I am terrible with letters. Thanks!
Steve answers:
Dear Sirs,
We want to refinance our house and use the equity to pay out our car loan and personal loan. To allow us to have fewer debts.In this financial crisis our country is experiencing is would be wise fro us to do this.
Thank you for your consideration.
Sincerely ,
Mr and Mrs _________________
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Your Questions About Auto Refinance Interest Rates
Lizzie asks…
How can I lower interest on an Auto Loan?
I have a loan with an 18% interest rate. How can I lower interest rate without refinancing? If I pay more than regular payment will that go to principal balance or interest?
Steve answers:
It will go to principle, but make sure that you note it on the payment slip. This doesn’t lower the interest rate, but will lower the amount of interest you pay.
Donald asks…
how early can I refinance my auto loan? I am not happy with the interest rate I got from the dealer.?
Steve answers:
You can refinance as soon as you find a bank that is willing to finance you at a lower rate.
Richard asks…
am i better off refinancing my auto loan or taking a lower interest rate loan and paying the car off with that
we got a used auto and financed through the dealership and the interest rate is extremely high. Should i refinance this loan or take a loan from my bank with a lower interest rate and pay off my vehicle and just pay the bank back.
Steve answers:
Auto loans are difficult to refinance because you will almost never have equity in a car. If you are one of those luck people that has a car that is worth more than what you owe, it can be done but keep in mind you will pay some fees which may be more than what you would save in the long run. If you have equity in your house (if you own one) you could take out a “home equity line of credit” or refinance your home to get a little money, home interest rates are still relatively low if you have a good credit score (720+). If you don’t have a home, you can try to get a loan from a bank for the amount you need but you typically need “double collateral” ie. If you want a loan for $20k you would need at least something/s worth $40k
Good Luck!
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Your Questions About Auto Refinance Rates
Ruth asks…
I need to auto refinance with bad credit?
i need help! i have a credit score of 570 and have an interest rate on my car of 17%. I want to refinance my car, ive been paying on time and want to get a lower APR. What is the best possible way to do this? and How can i get a lower APR with my credit score? Please help!
Steve answers:
A lower rate than 17% with a score of 570 may be tough– and you dont know what bureau they will go for, and I’m assuming 570 is your HIGH score? You have 3.
Your first option is to call up the original loan company and ask if they can lower your rate with a refi since you’ve paid on time– thats your best bet.
It could hurt your credit score, though– its better to have the same accounts for long term than to be opening/closing them.
David asks…
When should I refinance my auto loan (1 year later)?
I desperately took on a high 24.99% interest rate on my auto loan because my credit is not good, nor is it established and at a time like this I had no other choice. I have to start somewhere. I bought the car this month and have high hopes of paying my loan on time for the life of the loan. When should I try to refinance to at least get a better rate? Maybe a year from now?
Steve answers:
I would actually try to refi the car in 9 mo. Yeah one yr from now is ok, but the sooner you can, then more you’ll save. I realize desperate times require these types of actions. But know that the only people profiting from you is the bank. That interest rate is completely unacceptable under any circumstances. But from now on until you can refi, make that payment on time. Do not deviate. Building credit is all about proving to the lenders you are reliable. If possible, get an auto bank payment system set up. Have the bank transfer the monthly payment for you so that you will never be late. Of course, be sure to have your bank balance up too.
Chris asks…
what is best auto loan refinancing rate?
My current loan rate is 5.5% for 60 months. The remaining loan period is 48 months. Can I get a better rate than 5.5 if I look around? If so, can you suggest some? I wil give it a shot?
Thanks
Steve answers:
You won’t find a used-car loan better than what you have. The national average for a 48 month used car loan is 7.56% (Bankrate.com).
Your 5.5% rate was a new-car rate, and probably a promotional rate. Used-car rates are always higher than new-car rates, and there are no promotional used-car rates.
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Your Questions About Car Loan Refinance
Donna asks…
Where is the best place to refinance a car loan?
My current loan is through Toyota Financial. Should I go to them? Or do banks have cheaper rates? And I have seen a lot of .coms that offer car refinancing, is that safe? If anyone has any advice I would appreciate it.
Steve answers:
Credit Unions are the best and most reasonable rates. You have obviously been good with your payments, so your score should be good. They offer the best rates and will treat you like a friend and not a number or a loan profit.
Mandy asks…
how much will my interest rate go down after i refinance my car loan?
i bought a car 2 months ago and the dealer told me that i can refinance my loan after 7 months. my current interest rate is 12, what will it be after i refinance? please help!!! i live in NY if that helps
Steve answers:
You don’t really give us much information about your credit so it’s hard to say. It’s going to depend on 4 important factors
1. Equity in your car
2. Credit
3. Age of car
4. Miles on car
Assuming it’s a some what new car and low miles, and this is your first car and your just have limited credit.
You might be able to cut your rate in half. But, I don’t think we have enough information to say.
David asks…
How can I pay off my car loan quicker? Refinance an option???
I currently owe $26,000.00 on my car loan, with 8.9% interest. Would it be worth the refinance charge if it brought the interest down to 4.8% (the refinance charge would be approximately $2,000)? I’m on a six year loan. Is there any way to pay it off quicker?
Steve answers:
It depends on how many months are left on the loan. If you just took the loan out, then yes it would be a good idea to refinance the loan at 4.8% rate if that is the best you can do. It is possible that you can pay off your loan by over paying your monthly payment (assuming there are not penalities for doing so) but, check you loan agreement first.
Based on what you told me you are paying about $416/month for your car loan over a six year loan at 8.9% for a original loan amount of $26,000.
Your savings per month would be $51 dollars and over a six year period at 4.8% discount rate that would have a present value of $3,188, so paying $2000 to buy down the loan rate is an ok idea but, why did you sign up for a 9.9% interest rate? That is a sky high rate. What is your credit score? I think you can get a better deal at a credit union.
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Your Questions About Auto Loan Refinance Credit Union
Ruth asks…
Refinancing an auto loan at a different bank/credit union?
I’m really, really pissed at my credit union. It’s supposed to be “military friendly” and they kept going on and on about how low their rates were for people with little to no credit. Well as it ends up, we’re stuck with a $9000 car loan with a %16.1 interest rate. Can I go to a different bank (it’s been 6 months) and get a better rate. We have a credit score around 725 (and did when we first got the loan so the rate should have never been that high). Please help me!
Steve answers:
I don’t understand why you are pissed at anyone but yourself.
Noone made you agree to a 16+% interest rate with 725 credit.
Ignorance isn’t always bliss – if you don’t know what credit and interest rates mean, you should delay your purchase or decisions until you do know.
If you didn’t put any money down, it is unlikely that you will be able to refinance now. You have barely paid off any of the principle with a 16+% interest rate and your car has depreciated at least 15-20%.
In 2011, lenders typically will not lend money if your loan amount is higher than the value of the vehicle.
You could refinance, but you will likely need a significant down payment.
Donna asks…
Should I refinance my auto loan again?
I recently (about a week ago) refinance my 6-year 21% loan to a 4-year 11.5% loan. I did i through a credit union and at a higher than prime rate because I don’t have much credit and/or high revolving balances. My question is, in about a year, should I refinance again through the same credit union for a 3-year loan? I will probably get a little better rate. The only thing is, we are hoping to not have the car much longer than another year. If we trade it in, I will owe about 1500-2000 over trade-in value. I know, paying more every month is an option, but just not feasible right now. Any suggestions?
If I refinance with 3 years left, I will be paying less interest since my rate will be better.
Steve answers:
Roy is right, every time you re finance your total dollar amount of interest goes up even though the rate goes down because you are never really paying on the priciple balance
Sharon asks…
Auto Loan Refinance Question?
My credit union approved me to refinance my vehicle for 3 years at 2.9% for a max of $25, 750.00. I owe $29,000.00. I will have to come up with the difference of $4000.00 which I only have $1000.00 of. I can take it off of one of my cards at 0% interest till 2010 and pay it off in 3 months. My question is is that wise? My current rate is 7.9% on the vehicle. When I bought it a year ago my score was much lower then it is now. Any thoughts?
Steve answers:
You’re move isn’t wise at all. You’ve essentially compounded the situation. The best thing is to pay extra and retire this loan ASAP. GEt mad, get another job, sell stuff, get madder, get it done.
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Your Questions About Car Refinance Rates
Sandy asks…
Where can I get the best rates to refinance my car?
Steve answers:
I got my car loan from E-loan at 6.25% over 5 years in January 2007
Sharon asks…
Will the drop in the fed rates help me if I refinance my car?
Or would the equal decrease in the Prime Lending Rate?
Steve answers:
Doubtful
refiing a car usually doesn’t lead to any savings — the amounts are too small and the costs too high.
Sandra asks…
what is the best APR rate when u refinance the car? my credit score is 675?
i’m planning to refinance my car,,, last year,i got my car at 9+% rate which i think was high but i had no choice then coz my credit score was bad, but i tried to rebuild it and right now my credit score 675? do u think i can still get lower that 9+% APR if i refinance it?
Steve answers:
If its a used car, 9% really isn’t too bad– especially if its over 5 years. The lowest you can get– and with REALLY GOOD credit, is more like 6-8% on used cars, unless its some sort of special deal. (Generally speaking.)
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