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Old 12-05-2012, 07:59 AM
 
Location: Keosauqua, Iowa
9,261 posts, read 17,984,734 times
Reputation: 12597

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Quote:
Originally Posted by Malloric View Post
Yeah, but over a year ago means he's paid down around $3,000-$4,000, so he paid around $20k for it.
Did you miss the interest rate he posted? Assuming this is a 5-year loan and no down payment, he paid just under $18K for the car. And if he rolled TTL into the loan the purchase price would actually have been less than that.

To those saying refi is the way to go: The OP didn't mention anything about his credit score, but but given his current interest rate I doubt that it's stellar so I wouldn't assume that he's going to get a sub-3 interest rate a year later. And even if he could, he'd have to extend the load another year to save any money, and even then it's only going to be around $75. I don't this small saving is going to solve his problem.

I'll say again that the best solution to this problem is to cut spending to the bone and increase earning via a part-time job or some other means. Double or triple the payments for 6 months or so, then when the balance gets to around $8K look at refinancing at a lower rate for the same repayment period. $8K @ 3% for 3.5 years would be $200/month; even at 6% the payment would only be $211 at that point.
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Old 12-05-2012, 09:03 AM
 
344 posts, read 388,831 times
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Bite the bullet. Most people have made a bad decision with a vehicle at least once in their life. Vehicles depreciate in value, so the chances of coming out ahead is slim unless you drive one for a long time and negotiate a great deal. Not sure if you traded in another vehicle with inequity to be in such a negative position.

You may want to check to see if you purchased an extended warranty. If so you can cancel it immediately and receive a pro-rated amount that will reduce the principle.

IF you feel you have a good vehicle, I would follow some of the advice of the previous post and just pick up an extra job and pay down the balance. No need to trade down with negative equity and try and finance less car for the same money.


Quote:
To those saying refi is the way to go: The OP didn't mention anything about his credit score, but but given his current interest rate I doubt that it's stellar so I wouldn't assume that he's going to get a sub-3 interest rate a year later. And even if he could, he'd have to extend the load another year to save any money, and even then it's only going to be around $75. I don't this small saving is going to solve his problem.
Absolutely correct. Unless you are financing a higher amount and can reduce your rate tremendously, then refi does not make any sense.
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Old 12-05-2012, 11:53 AM
 
13,325 posts, read 11,040,773 times
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Depending on how much driving you did, you should be able to pay off what you owe in about a year using what you save if you can get by without a car (gas, insurance, maintenance, taxes, fees, parking, etc.).
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Old 12-05-2012, 06:49 PM
 
5,407 posts, read 6,290,941 times
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Quote:
Originally Posted by duster1979 View Post
Did you miss the interest rate he posted? Assuming this is a 5-year loan and no down payment, he paid just under $18K for the car. And if he rolled TTL into the loan the purchase price would actually have been less than that.

To those saying refi is the way to go: The OP didn't mention anything about his credit score, but but given his current interest rate I doubt that it's stellar so I wouldn't assume that he's going to get a sub-3 interest rate a year later. And even if he could, he'd have to extend the load another year to save any money, and even then it's only going to be around $75. I don't this small saving is going to solve his problem.

I'll say again that the best solution to this problem is to cut spending to the bone and increase earning via a part-time job or some other means. Double or triple the payments for 6 months or so, then when the balance gets to around $8K look at refinancing at a lower rate for the same repayment period. $8K @ 3% for 3.5 years would be $200/month; even at 6% the payment would only be $211 at that point.
Why delay a refinance for another year? If he waits a year to get a 3% rate, he has increased his expenses for no reason. It doesn't stop him from cutting other expenses to the minimum and getting a 2nd job.

In the summer, my sister bought a used vehicle for 7% rate for 60 from the dealer. I advised her to refinance. Two months later the purchase, she refinanced for 2.49% for 58 months for the same loan. She will save at least $3,500 over the course of 58 months. If she refinance at 24 months, her savings would be less than $2,000 over the course of 36 months. If he refinances earlier, he will start saving immediately.

Last edited by move4ward; 12-05-2012 at 07:08 PM..
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Old 12-06-2012, 07:59 AM
 
Location: Keosauqua, Iowa
9,261 posts, read 17,984,734 times
Reputation: 12597
Quote:
Originally Posted by move4ward View Post
Why delay a refinance for another year? If he waits a year to get a 3% rate, he has increased his expenses for no reason. It doesn't stop him from cutting other expenses to the minimum and getting a 2nd job.

In the summer, my sister bought a used vehicle for 7% rate for 60 from the dealer. I advised her to refinance. Two months later the purchase, she refinanced for 2.49% for 58 months for the same loan. She will save at least $3,500 over the course of 58 months. If she refinance at 24 months, her savings would be less than $2,000 over the course of 36 months. If he refinances earlier, he will start saving immediately.
Because the savings to be realized by refinancing now for the full balance due won't amount to a hill of beans over the course of 6 months. If the OP can bear down and cut the principle in half before refinancing the payment reduction would be significant.

I suppose he could do both, refinance now at a lower rate to save a couple of bucks then refinance again down the road after he's paid down the balance. There's really no downside to doing this with a car loan as opposed to a home mortgage where you have closing costs to consider. It just seems like a hassle for minimal benefit. JMHO, of course.
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