Vehicle Refinancing
Author: CoffeeCrisp
Posted: Tue May 10, 2005 2:04 pm
Post subject: Vehicle refinance question..
We currently owe 16,000 on our van at 7.95%. We can refinance the remaining 16,000 balance at 11.29 percent bringing our payments down from 420.00 to 350.00.
The rate is higher but now my payments would be less...
Stupid thing to do?
Heres the history:
We went BK 3 years ago.
Got loan for van at 9% orginally but refinanced to 7.5% which brought our payment from 450.00 to 420.00.
This offer I have now is the only offer we got thru Lending tree. Our fico scores are in the 650 range.
I appreciate any help!!
Author: CreditCardGuru
Posted: Tue May 10, 2005 7:58 pm
Post subject: Vehicle refi
Sounds kind of weird, usually payments go UP when interest goes up.....I personally don't like Lending Tree as they kind of screwed me on an auto loan. I would go to banks you know that are more likely to be "leniant" for refinancing! As they say the bank down the street might give you a loan, whie the bank two blocks down might not!
Author: Polonius
Posted: Tue May 10, 2005 11:03 pm
Post subject: Refinance
It's going to take you more than 5 years to pay off that van, and you'll be paying an additional $5,000 plus in interest.
It makes no sense at all to pay a higher interest rate and stretch a van payment an additional 5 years, especially since you've apparently owned it a few years already, right? Rule of thumb is to finance any car over no more than 4 years total.
Suck it up and pay the $70 extra to keep your low interest rate. Or just sell the van and buy something you can afford.
Author: CoffeeCrisp
Posted: Wed May 11, 2005 6:30 am
Post subject: Refinance
Yeah, the van is an 03 bought in 03. We can afford it but I was just looking for a smaller payment because I am a tightwad..lol.I was only looking at the short term. Thanks!
Author:damnage
Posted: Wed May 11, 2005 1:20 pm
Post subject: Refinance
Polonius is right on the mark here. I did some quick calculations. You appear to have approximately 40 remaining on the loan. If you take the higher interest rate and then stretch the term to 60 months (adding 20 more months) you arrive at your payment. You also end up paying about $2700 more in interest.
If you're a tightwad then keep more of your money in the long run by not paying that extra interest.
Also, vehicles are always depreciating due to age and mileage. Should you ever need to sell it you will get more of your money back by stickign with the terms you have now.
Be a real tighwad and stick with the loan terms you have now.
Posted: Tue May 10, 2005 2:04 pm
Post subject: Vehicle refinance question..
We currently owe 16,000 on our van at 7.95%. We can refinance the remaining 16,000 balance at 11.29 percent bringing our payments down from 420.00 to 350.00.
The rate is higher but now my payments would be less...
Stupid thing to do?
Heres the history:
We went BK 3 years ago.
Got loan for van at 9% orginally but refinanced to 7.5% which brought our payment from 450.00 to 420.00.
This offer I have now is the only offer we got thru Lending tree. Our fico scores are in the 650 range.
I appreciate any help!!
Author: CreditCardGuru
Posted: Tue May 10, 2005 7:58 pm
Post subject: Vehicle refi
Sounds kind of weird, usually payments go UP when interest goes up.....I personally don't like Lending Tree as they kind of screwed me on an auto loan. I would go to banks you know that are more likely to be "leniant" for refinancing! As they say the bank down the street might give you a loan, whie the bank two blocks down might not!
Author: Polonius
Posted: Tue May 10, 2005 11:03 pm
Post subject: Refinance
It's going to take you more than 5 years to pay off that van, and you'll be paying an additional $5,000 plus in interest.
It makes no sense at all to pay a higher interest rate and stretch a van payment an additional 5 years, especially since you've apparently owned it a few years already, right? Rule of thumb is to finance any car over no more than 4 years total.
Suck it up and pay the $70 extra to keep your low interest rate. Or just sell the van and buy something you can afford.
Author: CoffeeCrisp
Posted: Wed May 11, 2005 6:30 am
Post subject: Refinance
Yeah, the van is an 03 bought in 03. We can afford it but I was just looking for a smaller payment because I am a tightwad..lol.I was only looking at the short term. Thanks!
Author:damnage
Posted: Wed May 11, 2005 1:20 pm
Post subject: Refinance
Polonius is right on the mark here. I did some quick calculations. You appear to have approximately 40 remaining on the loan. If you take the higher interest rate and then stretch the term to 60 months (adding 20 more months) you arrive at your payment. You also end up paying about $2700 more in interest.
If you're a tightwad then keep more of your money in the long run by not paying that extra interest.
Also, vehicles are always depreciating due to age and mileage. Should you ever need to sell it you will get more of your money back by stickign with the terms you have now.
Be a real tighwad and stick with the loan terms you have now.
posted by CardRatings.com at 11:43 AM
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