Auto Refi or New Purchase?

[erinbean28]

Hello all and thank you in advance for your advice.

My husband and I have been working diligently to get our scores up and have successfully gone from the 480s to the 600s! We have two auto loans which we both got when our credit was very bad.

Our autos and loans are as follows:

1. 2012 Toyota Camry with 70K miles on it - 14% interest rate $470 a month payment and 4 years left on the loan.

2. 2011 Volkswagen Tiguan with 40K miles on it - 19% interest rate $530 a month payment and 5 years left.

We want to relieve the financial burden of these horrendous payments, but dont want it to negatively affect our credit. We also are not planning on doing anything automobile related until our scores are in the mid 600s. So, what is the best course of action? Refi through Navy Federal CU or trade in the vehicles (we are probably upside down on both of them at this point) and get something newer?

Any help is appreciated!   

[Burned2manybridgesB4]

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@erinbean28 wrote:

Hello all and thank you in advance for your advice.

My husband and I have been working diligently to get our scores up and have successfully gone from the 480s to the 600s! We have two auto loans which we both got when our credit was very bad.

Our autos and loans are as follows:

1. 2012 Toyota Camry with 70K miles on it - 14% interest rate $470 a month payment and 4 years left on the loan.

2. 2011 Volkswagen Tiguan with 40K miles on it - 19% interest rate $530 a month payment and 5 years left.

We want to relieve the financial burden of these horrendous payments, but dont want it to negatively affect our credit. We also are not planning on doing anything automobile related until our scores are in the mid 600s. So, what is the best course of action? Refi through Navy Federal CU or trade in the vehicles (we are probably upside down on both of them at this point) and get something newer?

Any help is appreciated!   

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Balances?

[erinbean28]

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@Burned2manybridgesB4 wrote:

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@erinbean28 wrote:

Hello all and thank you in advance for your advice.

My husband and I have been working diligently to get our scores up and have successfully gone from the 480s to the 600s! We have two auto loans which we both got when our credit was very bad.

Our autos and loans are as follows:

1. 2012 Toyota Camry with 70K miles on it - 14% interest rate $470 a month payment and 4 years left on the loan.

2. 2011 Volkswagen Tiguan with 40K miles on it - 19% interest rate $530 a month payment and 5 years left.

We want to relieve the financial burden of these horrendous payments, but dont want it to negatively affect our credit. We also are not planning on doing anything automobile related until our scores are in the mid 600s. So, what is the best course of action? Refi through Navy Federal CU or trade in the vehicles (we are probably upside down on both of them at this point) and get something newer?

Any help is appreciated!   

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Balances?

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1. Toyota $17,112

2. Volkswagen $21,795

[Burned2manybridgesB4]

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@erinbean28 wrote:

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@Burned2manybridgesB4 wrote:

---

@erinbean28 wrote:

Hello all and thank you in advance for your advice.

My husband and I have been working diligently to get our scores up and have successfully gone from the 480s to the 600s! We have two auto loans which we both got when our credit was very bad.

Our autos and loans are as follows:

1. 2012 Toyota Camry with 70K miles on it - 14% interest rate $470 a month payment and 4 years left on the loan.

2. 2011 Volkswagen Tiguan with 40K miles on it - 19% interest rate $530 a month payment and 5 years left.

We want to relieve the financial burden of these horrendous payments, but dont want it to negatively affect our credit. We also are not planning on doing anything automobile related until our scores are in the mid 600s. So, what is the best course of action? Refi through Navy Federal CU or trade in the vehicles (we are probably upside down on both of them at this point) and get something newer?

Any help is appreciated!   

---

Balances?

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1. Toyota $17,112

2. Volkswagen $21,795

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Got your snorkel?

LTV is gonna play big time. I'd say it wouldn't hurt to ask NF, but expect a no. Bone up on the payments, so you can get the balances down, or one trick I did was use a zero apr CC to move, but knew damn well I was going to pay it off in time before the promo was over.

[erinbean28]

Is it worth it to get pre-approved through NFCU for a vehicle purchase and trade the vehicles in? I dont want to have to sit on these rediculous payments for another two years.

[Burned2manybridgesB4]

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@erinbean28 wrote:

Is it worth it to get pre-approved through NFCU for a vehicle purchase and trade the vehicles in? I dont want to have to sit on these rediculous payments for another two years.

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You're honestly better off asking in Auto, instead of rebuilders...

IMO, I'd say it wouldn't hurt to try.

[Anonymous]

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@Burned2manybridgesB4 wrote:

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@erinbean28 wrote:

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@Burned2manybridgesB4 wrote:

---

@erinbean28 wrote:

Hello all and thank you in advance for your advice.

My husband and I have been working diligently to get our scores up and have successfully gone from the 480s to the 600s! We have two auto loans which we both got when our credit was very bad.

Our autos and loans are as follows:

1. 2012 Toyota Camry with 70K miles on it - 14% interest rate $470 a month payment and 4 years left on the loan.

2. 2011 Volkswagen Tiguan with 40K miles on it - 19% interest rate $530 a month payment and 5 years left.

We want to relieve the financial burden of these horrendous payments, but dont want it to negatively affect our credit. We also are not planning on doing anything automobile related until our scores are in the mid 600s. So, what is the best course of action? Refi through Navy Federal CU or trade in the vehicles (we are probably upside down on both of them at this point) and get something newer?

Any help is appreciated!   

---

Balances?

---

1. Toyota $17,112

2. Volkswagen $21,795

---

Got your snorkel?

LTV is gonna play big time. I'd say it wouldn't hurt to ask NF, but expect a no. Bone up on the payments, so you can get the balances down, or one trick I did was use a zero apr CC to move, but knew damn well I was going to pay it off in time before the promo was over.

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LOL, I would definitely tend to agree here. Try, but they may or may not go for it. The VW may be easier as its got lower miles and more life on the original loan left. Trading in is not going to be very palatable either as you're going to take an even bigger bath on trade-in value...

[Anonymous]

I am not a credit expert (still learning) but I am a car expert and study the business closely.  Trading in these cars will only make things worse overall, you may be able to get better interest but you will end up rolling a bunch of negative equity into the new loan and pay more in the long run.  Trading in cars will always result them essentially stealing your car for far less than what it is worth as a private sale because of course they need to make money.  I you can figure out the value of these cars by visiting kelly blue book and edmunds and then you will know where you stand, unless you put money down or bought well you will likely be upside down but till you do the research you will not know. Let us know what you decide.  Congrats on the progress made on the rebuild.

[DueDilligence]

There is some great info here. Me personally, I would always attempt to get pre-approved from my bank and then go forward with my purchase. To my understanding most places get incentives for going through certain lenders.

[SamsungHDTV]

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@Anonymous wrote:

I am not a credit expert (still learning) but I am a car expert and study the business closely.  Trading in these cars will only make things worse overall, you may be able to get better interest but you will end up rolling a bunch of negative equity into the new loan and pay more in the long run.  Trading in cars will always result them essentially stealing your car for far less than what it is worth as a private sale because of course they need to make money.  I you can figure out the value of these cars by visiting kelly blue book and edmunds and then you will know where you stand, unless you put money down or bought well you will likely be upside down but till you do the research you will not know. Let us know what you decide.  Congrats on the progress made on the rebuild.

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This here is the correct advice. To answer your question in short: auto refi > new purchase. Assuming your main goal is to save money. Every time you buy or sell or trade in a car, you almost always lose money in the process. Dealers will buy your car under its value, and sell it higher than what they bought it from you for. This is how they make their money. Then they will sell you a new car, over what its worth which is also how they make money.

The best thing to do is try to get out of negative equity by putting extra towards the principle and then refinance.