Help with auto refinance

[fwill5rn]

Hi fico family, 

I am new to this board as I usually lurk and post around the rebuilding and cc boards.  I have a dilemma.    I want to refinance my auto loan with my local CU.   My loan presently is a whopping 20% interest rate with 32 mths remaining.  Payoff is approx 10, 500. My credit union offered to refinance  at 14.79% due to credit acore for 36 mths.  My note would be the same as I pay now.  How is this so?  What sense does it make to refinance and not lower the monthly note.  GAP insurance and life benefit are included.  Any advice or insigt is welcomed.   Will I be paying more towards principal?   HELP!!!!!!

[Anonymous]

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@fwill5rn wrote:

Hi fico family, 

I am new to this board as I usually lurk and post around the rebuilding and cc boards.  I have a dilemma.    I want to refinance my auto loan with my local CU.   My loan presently is a whopping 20% interest rate with 32 mths remaining.  Payoff is approx 10, 500. My credit union offered to refinance  at 14.79% due to credit acore for 36 mths.  My note would be the same as I pay now.  How is this so?  What sense does it make to refinance and not lower the monthly note.  GAP insurance and life benefit are included.  Any advice or insigt is welcomed.   Will I be paying more towards principal?   HELP!!!!!!

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If you are planning to keep the car then where the money is going -- principal or interest -- is irrelvant in your case. In the current situation you are going to pay 32 months times the monthly note, in the refi case 36 months times the same montly note. So if you refi you will pay 4 months  times the monthly note extra. do you value the GAP and life insurance at that price? chances are for a car that the loan is 10, 500 payoff the gap is not worth it though you could check trucar and edmunds and kbb for the vlaue of your car vs what you owe on it. 

in general what you need to look at is the ammortization table. Bankrate has a nice calculator at http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx (click at the bottom to how the table after you enter in your numbers) but you should be able to get the amortization table for your current loan and for any refi loan you are considering.

[Creditaddict]

$10,500 at 36 months at 14.79% is $362.91

[fwill5rn]

With the insurance and Gap it came to 12,000.  I guess I really wanted life benefit for loan.  Hubby died last year so I want it paid  for my children sake

[Hoya08]

Even though your interest rate is lower, your payment is not lower because the loan term is less than the ORIGINAL term, NOT how many months you have left.  Any payment savings gained from the decrease in interest rate is offset by the increase in payments due to a decrease in loan term.

If this is your only option, sticking it out for the next 32 months is the best way to go.

If you can extend the refinance loan term to 48 months or more, then your payments will decrease, assuming the interest rate does not increase.  However, given your current rate at 36 months, the interest rate is likely to increase with a longer loan term.

[Creditaddict]

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Sorry to hear about your husband but if this is more about your children being protected than take out a term life insurance policy for 10 years and they would get WAY more out of it and you would probably pay less for it than covering just the car and if something happens to you are they going to be worried about the car?

[Anonymous]

What credit addict just said. And it depends on the age of your children and your estate situation. If you have very small children run and get out life insurance--little kidlets need to be protected because stuff just happens.

But if they are older, consider the state of your estate. It is your estate that is liable for your debts -- not your children (and depending on your state not even your husband would have been unless cosigned). It doen't mean they will not try to collect from your children. It is just that your children should be free to tell them to stop bothering them and go after the estate. OK estate probation would be a pain in the butt but it always is in death anyways.  If your estate is large then clearly there is nothing to worry about. If the etate has nothing, then the lender is SoL but I am nto sure any of us care about the lender. It only gets interesting when you have some money to leave...  and if you are really really worried about this you should have a chat with an estate lawyer. It may be time to set money aside for funeral, get life insurance, get a will, start gifting part of your estate to yoru children to the max tax free allowed with some kidn of contract that assures them taking care of you when you are really really old, etc.

The lender insurance? It protect the lender if you die. The life insurance protects your assets and your children when you die. World of difference...