I've improved my credit score over the past couple of years, and I wanted to see about refinancing my current auto loan with a lower interest rate. I contacted Wells Fargo. They are financing the car at the moment. They offered to refinance for 66months @ 12.49% to reduce my monthly payment to $248/mo. He said that a BETTER deal would be to do a larger loan with a cash out. Here are all the details I've compiled:
Current Loans
Ford Flex
Total Payoff: $10,900 @ 7.49%
Payment: $455/mo
Payments left: 26
VW GTI
Total Payoff: $8650 @ 7.34%
Payment: $288/mo
Payments left: 34
Navient
Total: $2000
Payment: $58/mo
All Loans: $21,550
Total Monthly Payments: $808/mo
Proposal
Create a new loan for $21,550 @ 12.49% APR for 66 months. Pay off current Wells Fargo loan and receive cash in hand $10,600.
Use that cash to pay off VW $8,650 and Navient $2000.
New Loan
Payoff: $21,500 @ 12.49%
I'm getting ready to sell the VW GTI, and I can expect to get between $11K-$12K. I could use that money to pay down the principal on the new loan, but I can't get past the interest rate. It seems like this deal is really only beneficial for Wells Fargo.
Something else he mentioned, that seems...wrong. He said by paying off the student loan, any derogatory marks from missed payments would disappear. That seems to conflict with what I have heard.
Does this deal look as horrible as it seems?
