Approved @ Wells Fargo for 72month refi @ 17%, have 630 median FICO score. anyone else I could try?

[Anonymous]

Well, sounds like you have a lead you are comfortable with.  Good luck. 

Just remember, even if your payments are "less" you are actually going to pay more in interest over the loan and you will end up in a more severe negative equity position and do so faster.

With 20K income, I'd suggest figuring out how to cut something in the budget and pay the car off in 6 months.

[Anonymous]

I'm actually planning on paying off the loan in February 2010 when I recieve a lum sum from a vesting of an equity stake.  What I'm looking to do is reduce the cash outflow required to service the loan from today until then. 

I applied on some online websites and got a call from a Honda dealer.  They said they could get me a loan, structured as a used car sale but would need to technically buy the car and sell it back to me (inquiring sales tax / motor v. etc. ~$3500) which is just silly.  Even if it saved me $500 per month, it would be roughly even after 7 months.  Doesn't make sense to do that.  Still looking on options to re-fi.

[Anonymous]

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@Anonymous wrote:

I'm actually planning on paying off the loan in February 2010 when I recieve a lum sum from a vesting of an equity stake.  What I'm looking to do is reduce the cash outflow required to service the loan from today until then. 

I applied on some online websites and got a call from a Honda dealer.  They said they could get me a loan, structured as a used car sale but would need to technically buy the car and sell it back to me (inquiring sales tax / motor v. etc. ~$3500) which is just silly.  Even if it saved me $500 per month, it would be roughly even after 7 months.  Doesn't make sense to do that.  Still looking on options to re-fi.

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Yes, these deals are very dicey.  They must "buy" your car, then mark it up, then charge you TTL, plus they sometimes require you to put up a cash down.  Sometimes they "fake" the down by marking the price up, then claiming you paid a down (for example saying you are buying for $54,000 and borrowing $49,000).  The reason is they are going through a third party lender, so they must own the vehicle, they must show the vehicle is within loan to value ratios necessary, and they usually must show that you have put a down (thus the mark up then down trick).

Plus, as stated, they must make a profit and since they must "pay off" the existing $49k, they will mark the price up as much as 10%.  So you end up borrowing the current loan amount plus 10% plus TTL.

Why are they willing to do this:  Because they get 10% for shopping the lenders and doing the paperwork.  You get a very expensive loan.

I highly suggest you do NOT do this type of transaction.  I personally believe it is not legal as they are misleading the ultimate lender on facts.

Message Edited by txjohn on 05-05-2009 07:17 AM

[Anonymous]

I think you are exactly right.  This was a sketchy honda dealer in a relatively low-income community specializing in selling cars to people with no or little credit history.

[Anonymous]

One thing that is not clear is why you need to refi this car if you actually gross 20K per month.  It is an expensive loan, but if you really make that much, you should be able to float this until next february realtively easy unless you are living beyond your means across the board.  If that is the case, maybe just buying another car is a better option.  Then when you get the money next year you could pay off the "new" loan, GW the recent auto lates for removal (if possible), and get to a situation where you are living within your means.  No offense meant, but obviously if you 20K in income per month it is going somewhere.  If some circumstances have changes to make this car unaffordabel now then you shoudl probably downsize...If ther car was never really affordable then you should defintely downsize.  Either way, good luck with it.

[Anonymous]

It sounds like his income is not a paycheck, but "returns" on various investments or projects, meaning it is not a check every 2 to 4 weeks.

People in this boat may show $250k end of year, but only had 3-4 "paydays" during the year, meaning they must manage the cash flow between income injections.

[Anonymous]

in response to mickie, i dont need to re-fi, i can pay the loan.  but when i got the loan my fico was low 500s, probably 520-530?  now its 630-650 and I thought i would be able to re-fi and save some money.  regardless of my income (20k gross, ends up being close to 10k net) $500 a month would be awesome in savings.

i'd just rather stick that $500/month in some investment grade corp. bonds and get 8% per annum then wasting it on interest.  i love my car though lol 

[Anonymous]

txjohn, you are right about this.  27% of my gross income is paid 2x per month, 73% of my gross income is paid annually (usually around feb 1st).  In addition to this I have some of my annual lump go into deferred comp, which is not part of the 20k /month

so yes, a lot of managing of cash flow, i build very detailed budgets and fund a checking acct for "spending money" to keep myself under control lol.   so instead of this large payment eating away at my savings, i'd be happy to knock 500/month off of it

[MattH]

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@Anonymous wrote:

I have 45 months remaining on the car loan.  Pmt X # of Pmt = $66k, current loan is about 49k, car is worth 50k now.  I bought it new for .. about 85-90k. 

Even if I go out and buy a 30k car, id need to put down 20% or so to get a new loan. 

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Here is my suggested plan of action, assuming the loan does not have a prepayment penalty clause (read the fine print with close attention, and if there is something you do not understand repost here asking for help interpreting it).  Note that some lenders may require extra principal payments be sent to a different address and/or be worded in a specific manner or they will treat them as regular payments being made ahead of schedule.

1. Hang onto the car until you have substantial equity

2. Do extensive research to obtain an accurate market value for the car, check multiple sources including the website of Consumer Reports (if you don't already subscribe to the printed magazine, you'll need to pay a modest fee for full access to their car price database, which is well worth the price).  You don't want guesss, particularly in this tough market where many people are being shocked by how little their cars are worth, you want realistic and current numbers.

3. Now use the calculators here to figure out how quickly you can reduce the principal balance on that loan by making extra payments.  Try different scenarios to figure out how by reducing other spending for a while you can lower that principal balance as quickly as possible.

The basic goal is to get that principal balance down, and to get it down faster than the car depreciates so that you build up some equity in that car.

Finally:

4. When the principal balance is less than a realistic market value, to the tune of around $6K in equity, trade that unaffordable car in for a used car.  It is certainly possible to get reliable transportation for around $6K, and that is what you need.  New cars are an expensive luxury for people who already have all their other financial ducks in a row.

Edited to add: from the followup postings I gather original poster has substantial cash flow from various investments.  In that case, it makes even more sense to pay down the loan as quickly as possible and never again borrow a cent for any type of vehicle.  Rule Number One of investing is that extra principal payments on debt are an ultra-safe investment whose yield equals the interest being paid, and therefore in most cases paying down debt is the best possible place to put cash.  Mortgages can be a major exception to the rule of paying debt before investing other places because they tend to have low rates and get favorable tax treatment, but even there it is not easy in the current market to get comparable yield without assuming some risk.

Message Edited by MattH on 05-12-2009 06:59 AM