I know I am a fool, but can it be helped?

[Anonymous]

I have an auto loan that I got right after a motor cycle accident, because I needed a vehicle and I didn't have the cash in hand.

I bought a car on 9/1/15 for $14,700 at 19.5% apr on a 61 month loan with payments at $389 per month, I was told it was a 48 month but after looking carefully at the documents they obviously lied to me. 

I know its a ridiculously high apr loan but I have plans to pay it off 4 years early, I already pay $500 per month so $111 goes to principal every month already and starting in Jan 2017 I plan to be making an additional 1k per month payment on top of that $500.

I'm young single with no children and I have 0 debt outside of medical bills from the accident so this is how I'm able to do that, and I'll have paid the medical debt off in Dec 2016

Ok so thats all good, but the question is am I an idiot for not refinancing, My scores are slowly rising now 670 TU FICO (from BofA and Discover reports) I have been getting pre quals for lower financing although still not that great at 11% apr but the payments drop to $275 from $389, I'm sure that resets me to 60 months which I never wanted but I'm already stuck with it, but most importantly of all I want to buy a house in 2.5-3 years from now instead of investing in the stock market I'd rather own a physical thing that I can see and own and I don't want to hurt my chances by constantly getting new loans on my history.

Also I imagine I should wait before I refinance and by the time that I should actually refinance I might as well just finish paying it off at least thats been my train of thought

Should I not be worried about it and just get a refinance? I have lots of Inqs and I don't really want to get a bunch more for a early refinance

Sorry for the long post thanks for reading if you did.

[Anonymous]

What is the balance of the loan?

With what your scores are now you should be able to at least cut that rate in half. If your goal is to buy a house in 2 years the hard pull no will have little to no effect

[Anonymous]

First, you probably need to check and make sure the excess payments you are making are being applied to the principal.

Many lenders will just push excess amounts to the next month's payment - which means that the extra $111 on one month isn't actually lowering the principal by $111, it's paying the next month's interest and principal, which at this point in the loan the amount of principal in each payment is small.  Your first couple of years' payments are primarily made up of interest with smaller imapact on principal.

Your interest rate is high, so of course a refi with a lower rate will reduce your interest and therefore your payments.

You are not stuck with another 60 month term if you refi, though - you can choose a 36 or 48 month refi instead.  The payment will be higher than the quoted $275 or whatever, but probably still lower than your current payment.  Since you are on track for an accelerated payoff anyway, there really isn't a reason to hold on to your high interest rate if you qualify to get away from it.  Each month's payment is made of a chunk of interest and a smaller chunk of principal (at least on the first couple of years of a loan), so if you can reduce the size of your interest chunks each month, you can make bigger holes in your principal, especially with additional principal payments.  Again, make sure your lender is applying those directly to principal and not just prepaying interest for you.

[settleordelete]

Sorry to hear about your accident. But its good to hear you are doing fine.

As for refinancing, I think you owe it to yourself to try and get better terms at an even lower monthly payment.

If you're able to sustain those $500/ month payments then why not at 36 or 48 months?

Certainly, you deserve alot better than that 19.5% and maybe even that 11%. Check out some credit unions like DCU, PENFED and other local ones in your area.

Good luck to you.

[Anonymous]

"todays payoff" is $13,700 and I did check to make sure my extra payments are going to interest, one thing that I did forget to say was that my loan is through capital one, and I really wish capital one would be willing to refi because then i would do it no problem.

So I think it does make a lot of sense to refi but should I wait a few months to see if I can get over 700 FICO before I try for one, not to mention waiting for the loan to at least be 1 year old?

[Anonymous]

The age of the loan does not affect its ability to be refinanced.  Assuming the payoff on the current loan does not greatly exceed it value, it can be refinanced with a better rate.

If you wish to wait a while to get your scores higher, that will equate to a lower rate - but you will still be paying the almost-20% rate until then, so it becomes a math problem, to figure out if the benefit of waiting outweighs the cost.

Capital One, like almost every other lender out there, will not refinance their own loans, so yes, if your original is with them then you can't refi with them, you'll have to look to a different bank or a credit union, or some other lending source.

[Anonymous]

as others have mentioned, you don't have to refi at 60 months. You can make it for a shorter term.

you should easily be able to cut that rate in half if not more.

[RonM21]

I'd go for getting the lower rate. I get that you csn handle what you are paying now, but I think you'd be better off in the long run.

[SouthJamaica]

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@Anonymous wrote:

I have an auto loan that I got right after a motor cycle accident, because I needed a vehicle and I didn't have the cash in hand.

I bought a car on 9/1/15 for $14,700 at 19.5% apr on a 61 month loan with payments at $389 per month, I was told it was a 48 month but after looking carefully at the documents they obviously lied to me. 

I know its a ridiculously high apr loan but I have plans to pay it off 4 years early, I already pay $500 per month so $111 goes to principal every month already and starting in Jan 2017 I plan to be making an additional 1k per month payment on top of that $500.

I'm young single with no children and I have 0 debt outside of medical bills from the accident so this is how I'm able to do that, and I'll have paid the medical debt off in Dec 2016

Ok so thats all good, but the question is am I an idiot for not refinancing, My scores are slowly rising now 670 TU FICO (from BofA and Discover reports) I have been getting pre quals for lower financing although still not that great at 11% apr but the payments drop to $275 from $389, I'm sure that resets me to 60 months which I never wanted but I'm already stuck with it, but most importantly of all I want to buy a house in 2.5-3 years from now instead of investing in the stock market I'd rather own a physical thing that I can see and own and I don't want to hurt my chances by constantly getting new loans on my history.

Also I imagine I should wait before I refinance and by the time that I should actually refinance I might as well just finish paying it off at least thats been my train of thought

Should I not be worried about it and just get a refinance? I have lots of Inqs and I don't really want to get a bunch more for a early refinance

Sorry for the long post thanks for reading if you did.

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Push some more money towards the principal. Get your loan principal balance to 79% or so ... i.e. $11,600. Let that report on all 3 bureaus, which will bump your scores up a bit.

Then refinance.

[Anonymous]

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@Anonymous wrote:

"todays payoff" is $13,700 and I did check to make sure my extra payments are going to interest, one thing that I did forget to say was that my loan is through capital one, and I really wish capital one would be willing to refi because then i would do it no problem.

So I think it does make a lot of sense to refi but should I wait a few months to see if I can get over 700 FICO before I try for one, not to mention waiting for the loan to at least be 1 year old?

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Why would u want ur extra payment going to interest and not principal? To my understanding with capital one even if u were to make overpayment for one payment the over payment carry over to next month payment so let's say ur monthly is 380 and u paid 500 the extra 120 will go to next month payment making ur next month payment 260 but if u pay 380 and after that u make another payment for 120 and select apply to principal it goes to principal