Does this refinance make sense? Longer term / lower APR

[vertekal]

I currently have an auto loan, as follows:

Balance: 18,169

Months Remaining: 57 (started at 72)

Interest Rate: 16.78%

Monthly Payment: $459

I have a "recommendation" on Credit Karma to refinance that balance for either

84 months at 7.49%

$279/mo

or 

72 months at 6.99%

$310/mo

The interest rates are obviously way lower, and their math tells me I'll save 3000 - 4000 over 6 years. A lower monthly payment would help, but is it worth adding those months back to the loan?

I tried to refinance a few months ago at a local CU, but they couldn't help me. I've made every payment on time on this current loan.

If it matters, the car is a 2013 Mazda 3 SV that was purchased brand new. 

[StartingOver10]

Are those scores in your signature your current scores or were they your starting scores?

I ask because if they are your starting scores, can you post your current scores?

If they are your current scores, visit the rebuilding forum You may be surprised at how many points you can increase your score over a relatively short period of time. You may also have higher auto enhanced scores. If you haven't checked those scores yet, check them out since you have been paying on time for over a year. http://www.myfico.com/Products/FICO-Score-3-Report-View/

[vertekal]

Those are my current scores .. I'm not sure what my scores were when I bought the car around Sept 2013. I've been doing the 3 score monitoring on this site for a few months, and my scores have gone up a bit since then. 

[Hoya08]

From my experience purchasing and refinancing used cars, my lenders have used NADA or BlackBook to assess their values.

Using NADA values, with a 100% LTV loan, you're upside down around 4k.  At a 120% LTV, the best case scenario, the most a CU/Bank may lend is $16,800.  This leaves you about $1,300 deficient. 

Coupled with your scores, lenders may deem you high risk if you don't have a sizeable down payment. 

[TRC_WA]

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@Hoya08 wrote:

Coupled with your scores, lenders may deem you high risk if you don't have a sizeable down payment. 

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Agreed...

I just bought my car and went through a handful of denials with a 707 auto enhanced EQ score.

"Insufficient down payment" was the top denial reason.

I still got it at $0 down though. 

[vertekal]

I originally put $1500 down on the car in question. My FICO at the time was probably in the range of 525 to 540. 

[jhtrico1850]

You can do the math yourself, and indeed, the new (payment * months) is less than the original total (payment * months). The $310/month will cost less overall, and you'll be over equity faster.

If it's possible at all though, try and get your credit cards under 30%, and your score could jump and you can save even more (though I don't know your exact situation). In a year or 2 you can refinance again at a lower rate if your score improves.

[Ragelog]

I would be weary of Credit Karma recommendations as any sign you will be approved. I tried this about a year ago and was denied my scores were in the low 600's then. Getting refinanced is a great thing just don't want you to apply and get denied. With scores in the 500's I feel like getting a refinance will be difficult.

I would try to get those scores closer to mid 600's before refinancing. That is just my opinion though. Good luck either way.

[sccredit]

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@Ragelog wrote:

I would be weary of Credit Karma recommendations as any sign you will be approved. I tried this about a year ago and was denied my scores were in the low 600's then. Getting refinanced is a great thing just don't want you to apply and get denied. With scores in the 500's I feel like getting a refinance will be difficult.

I would try to get those scores closer to mid 600's before refinancing. That is just my opinion though. Good luck either way.

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I agree with this 100%

[vertekal]

Thank you, everyone!