Guest bastaad525 Posted February 9, 2006 Share Posted February 9, 2006 Looking at my SRT loan plan... and thinking... damn... what was I thinking!! I have been paying well over the set payment amount as it is, anyways, so I just figure, maybe I should settle for a higher payment or what I dont know, but get my term shortened, maybe hope for a better interest rate as well. I've only had the car going on 5 months now, and am wondering, is it too soon to refi? How would this affect my credit? Also, I called the loan company, and the option to pay off now seems to only lower the price by literally a couple hundred dollars than the total amount I owe still with interest. So if I refi, isn't that just a new loan that has to cover the whole payoff amount, and why is the payoff amount so damn high??? I thought if I payed it off fast I wouldn't have to pay all that interest? Anyways... a lot of questions all jumbled together, sorry about that... but damn I feel like I really kicked myself in the *** going for a long term loan, trying to get low monthly payments, when now that I think about it I just want the car payed off FAST and can definately afford more per month. SO.. is it gonna screw my credit score, and what is the best way to go about this whole process? Quote Link to comment Share on other sites More sharing options...
Mikelly Posted February 9, 2006 Share Posted February 9, 2006 According to my wife's best friend, who is a loan officer at the Credit Union my wife works for, It'll have a negative impact on your loan score two fold: It is another loan that will go against you. It will be rated second tier since the loan pays off a previous loan, which is extending the length of the secured credit on the car, which is depreciating rapidly. Unless you can seriously reduce the interest, I'd not do it. If your loan is at say 9% and you can get a better rate refinancing it at say 4.5% (Which some credit unions are doing) then I'd do it only if the interest reduction is the goal. If you're stretching it out longer to reduce the monthly payment, I'd just sell it and get out from under it all together, because it will look on your credit score like you might be spread to thin. You state that you can afford to pay more, so If you do refinance it, Refinance it for something like 36-42 months. The reason you're seeing such a high payoff is that the initial two years on a higher interest loan eat up a significant amoung of the payment in the interest charges. They get their money FIRST. If you can reduce the rate and shorten the terms, then do that and don't worry about the credit score. This info is good advice passed on through me... I have NO banking or lending experience, so take it for what it is, Third tier advice... But Sandy has never steered me wrong, so there you have it. Mike Quote Link to comment Share on other sites More sharing options...
Guest norm[T12SDSUD] Posted February 9, 2006 Share Posted February 9, 2006 Did you buy the BS life insurance, Disablity and Extended Service Contract?? If so, then go to the dealer and cancel all three and you will normally get a refund check directly from the dealer.The dealer makes a SHITLOAD of profit off these "back end" products, but the salesman normally only gets $20 extra.The finance guy will try and BS you so just tell em that you will call Chrysler and talk to them if he tries to tell you that you can't cancel the items. You should get a full refund on the Extended Service Contract if you cancel now since the car is still under a Manufacturer's New Car Warranty. Your credit will only be hurt if you miss a payment or are 30 days late on a payment. Later,Norm Quote Link to comment Share on other sites More sharing options...
Guest norm[T12SDSUD] Posted February 9, 2006 Share Posted February 9, 2006 If the original loan is paid off in full Mike there shold be no lowering of the credit score except for the temporary 3 month overlap that both open loans show up on the credit report. Once the credit report shows that the first loan is paid off in full then the score should go right back up. Later,Norm Quote Link to comment Share on other sites More sharing options...
Mikelly Posted February 9, 2006 Share Posted February 9, 2006 Norm, that's true. The only concern would be if he was doing a home refinance or something like a new home purchase. It'll take about 6 months for him to regain the points lost. But if he's able to lower the interest and shorten the duration of the loan by going somewhere else, It's all a wash in the long run anyway, because he'll be out from under the note that much sooner. Mike Quote Link to comment Share on other sites More sharing options...
Pop N Wood Posted February 9, 2006 Share Posted February 9, 2006 I have refinanced cars and my credit score is 797. Can't hurt it too much. And I think bastaard525 is looking for a shorter term loan, not longer. There should be no penalty for paying on a long term loan like it was a short one. The advantage of doing it that way is you have the flexibility of dropping down to the minimum payment should you have a rough month. If there is really no penalty for paying extra, then don't refinance unless you can get a better interest rate. Call around and shop for deals. The place we refinanced with said they were going to assume the loan for no cost with the same payoff period we already had. The interset rate was so much better it dropped our payment by something like $50 a month. An absolute no-brainer. Quote Link to comment Share on other sites More sharing options...
JMortensen Posted February 9, 2006 Share Posted February 9, 2006 When I bought my first new car it was a Subaru Outback and it was pretty expensive for me at the time at ~$25K, then I bought a house about a year later, and we really stretched for the mortgage. I tried to refi the car and the credit union flat out said no, they don't refi cars at all. So we asked about a personal loan and they said no to that too. Credit score was over 700 at the time, maybe I just used the wrong credit union (they really were assholes). Then again maybe it was because we had the mortgage now so we already looked STRETCHED. Finally we traded the car in on a much less expensive car and got the payment down that way. Never buy a new car with a high interest loan. The first one I got was 5.9%, the second 0%. I got a WHOLE LOT more car the second time, a GMC truck which we haggled down to ~$32K before rebates and all that crap, and the payments are pretty similar, IIRC they're within $30/month. One thing you could do to get out from under it is pay more each month. If they want $400, pay $600. There are loan calculators that will show you how much time that cuts off the loan, but it's pretty significant. Quote Link to comment Share on other sites More sharing options...
BayAreaZT Posted February 9, 2006 Share Posted February 9, 2006 Just out of curiosity, how much does your credit score drop if you do a home refi or purchase a new home? Quote Link to comment Share on other sites More sharing options...
Guest norm[T12SDSUD] Posted February 10, 2006 Share Posted February 10, 2006 Hey Bastaad just don't end up doing what this dude did after he was unhappy with his financing deal!!! http://today.reuters.com/news/newsarticle.aspx?type=domesticNews&storyid=2006-02-10T002618Z_01_N09252042_RTRUKOC_0_US-LIFE-SUICIDE.xml&rpc=22 Quote Link to comment Share on other sites More sharing options...
Guest bastaad525 Posted February 10, 2006 Share Posted February 10, 2006 Here's the deal... when I bought the car I wasn't thinking as clearly as I should have been, as was more concerned with a lower monthly payment. So like a bonehead I got a 6 year loan. Then I realize I'm making way more than my minimum payments anyways... so I thought about it and figured even if I got a loan for very similiar interest rate (I got 7.39%) if I chopped it down to a 4 or 5 year I could pay a little more than I usually pay as it is, and save a lot on interest over the whole term. But it's not so big of a deal that I would do it if it really risked hurting my score at all or wouldn't save me some money. Do you guys think I'd just be better off to keep paying off more than my minimum payments, and of course, all the extra I pay over the minimum goes on the principal. Quote Link to comment Share on other sites More sharing options...
Mikelly Posted February 10, 2006 Share Posted February 10, 2006 Dude, I don't know what your Credit score is but 7.39% on that loan 6 months ago was highway robbery. That is HIGH! Two recommendations for you here... Reduce the length to 36 months if you can swing it AND get that interest rate down. Go to a reputable credit union if at all possible to get that rate down to at least 5.5-6.0%. I haven't shopped for a rate in a while, but I know within the last two+ years we've bought three cars and the highest rate was 4.5%. I've seen rates as low as 2.5% on USED car loans through my wifes credit union (And this wasn't just an employee special, this was for all members). My credit union rates are: http://www.nwfcu.com/auto/rates.htm Can't find the link to my wife's CU, but when I do, I'll post them. Just use these as examples and shop the rates if you can. And just an FYI, I'd never finance something like this for 6 years. If you do a depreciation of minimal use on that car over 6 years, it's still not gonna keep pace with the paydown on the loan. You'd be upside down rather quickly on this loan. Mike Quote Link to comment Share on other sites More sharing options...
Guest bastaad525 Posted February 11, 2006 Share Posted February 11, 2006 you're absolutely right on the loan term... like I said I dont know WHAT I was thinking when I did that. I think it was more about trying to 'sell' my wife the idea... "Look honey how low of monthly payments we can get it for!". But really I should have considered the big picture. At the time I was shopping though I asked around a LOT and found that interest rates were more like 6%? I do have some credit 'issues' but my overall score is good... but I will say after shopping 5 different dealerships, 7.39% was by FAR the best interest rate offered to me, AND they sold me the car for well under sticker as well, so overall it was a great deal. Right now I'd refi in a heartbeat but I still wonder... it really seems the current finance company is going to ream me with penalties if I pay it off early, so even if I lower the interest a little bit and shorten the term it may not be enough to make up for the reaming. I've really got to sit down, get some loan offers I guess, and do some bottom line payment comparing. Quote Link to comment Share on other sites More sharing options...
Pop N Wood Posted February 11, 2006 Share Posted February 11, 2006 .Right now I'd refi in a heartbeat but I still wonder... it really seems the current finance company is going to ream me with penalties if I pay it off early.... Do you know that for a fact? Every car loan I have ever had there is no penalty for paying the loan off early. You need to call them and ask them if there is a penalty for ealy payment. Should be a one word answer. And if all you want is a shorter term, then you shouldn't need to refinance to do that. Just pay on the loan as though it is a 4 or 5 year loan and you will pay off the car in 4 or 5 years. Simple as that. Quote Link to comment Share on other sites More sharing options...
Guest bastaad525 Posted February 12, 2006 Share Posted February 12, 2006 Do you know that for a fact? Every car loan I have ever had there is no penalty for paying the loan off early. You need to call them and ask them if there is a penalty for ealy payment. Should be a one word answer. And if all you want is a shorter term' date=' then you shouldn't need to refinance to do that. Just pay on the loan as though it is a 4 or 5 year loan and you will pay off the car in 4 or 5 years. Simple as that.[/quote'] After reading the replies to this thread I decided to ask the finance guy at the honda dealership (just bought my wife a new Civic) about that, and he agreed.... no new car loan he'd ever seen had any kind of early payoff penalty on it. I told him what finance company I am with (Capital one) and he said he's dealt with them and there should DEFINATELY not be a penalty. So I went back and looked at my contract and realized I am a complete bonehead I was thinking what I owed on the principal for the CAR (which I bought for $20,300) but had forgotten the tax, licence and that little stuff, which added up to about $2,000, which is the number I figured they were adding on as an early payoff penalty. So yeah, as far as I can tell, there is NO early payoff penalty, it was just me not reading stuff right So now keeping that in mind, no payoff penalty at all, it's only really worth refinancing if I get a significantly lower interest rate, correct? The term isn't that big of a deal. I shortened it 6 months already by simply cancelling that extended warranty. As said above, I could always just pay more, and indeed I have been, average $50-100 over minimum every month, with whatever over I payed being applied directly to the principal. So... I guess I need to shop around and see what kind of rates I can get. If it's a significant drop then I guess I'll do it. I guess at least 2% or something like that would be worth it? Quote Link to comment Share on other sites More sharing options...
240ZR Posted February 12, 2006 Share Posted February 12, 2006 Its a bitch on new cars.... I refinanced my Z loan to get more money to work on it... (also helps me pump the value of insurance since now i had 5k more into car in receipts and 7k on loan) trying to get Insured value to 30k...... I figure 1k a year for every is fair for a true classic..... I SWARE TO GOD I have more people talk to me about my Z in the last 2 months then I did when i drove my dads classic mustang for the summer... As far As i know A prepayment peanilty in california is Illegal... its umm the rule of 76? or something like that... infact they want you to pay it off asap... b/c they know cars loose value fast.... Quote Link to comment Share on other sites More sharing options...
Mikelly Posted February 12, 2006 Share Posted February 12, 2006 Bastaad, Shop for a rate, get qoutes on the timeframes you're interested in and they will calculate your payment for you. That'll tell you if it is worth it or not. I can see the reduction in interest saving you between $400-800 on a five year note. Mike Quote Link to comment Share on other sites More sharing options...
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