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New Member
Posts: 13
Registered: ‎01-13-2014
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Worth trying a refinance?

Hi everyone. 

 

So I purchased my vechicle (2016 Kia Sedona) a little under a year ago. My credit was in the low 600's (I think 615's or so)at the time. I received a APR of 10%. I now have a 692 (Trans) / 701 (EF) score. I've since paid off all other debt (about 15k of student loans and CC's (mostly cc's)). My vehicle cash value is currently at 16,600 for trade in value via KBB. I owe 26k on the vehicle. 

 

Is my LTV worth attempting a refi on my loan?

 

I am a USAA member and do have access to NFCU if needed.

 

Thanks for your input. 

Valued Contributor
Posts: 1,498
Registered: ‎08-12-2012

Re: Worth trying a refinance?


s2srea wrote:

Hi everyone. 

 

So I purchased my vechicle (2016 Kia Sedona) a little under a year ago. My credit was in the low 600's (I think 615's or so)at the time. I received a APR of 10%. I now have a 692 (Trans) / 701 (EF) score. I've since paid off all other debt (about 15k of student loans and CC's (mostly cc's)). My vehicle cash value is currently at 16,600 for trade in value via KBB. I owe 26k on the vehicle. 

 

Is my LTV worth attempting a refi on my loan?

 

I am a USAA member and do have access to NFCU if needed.

 

Thanks for your input. 


You owe too much on the vehicle...any lender with a low interest rate will only loan KBB loan value.That will be a little higher than tradein value but you are underwater on this loan. Now if you have the cash to pay the difference it might be a good decision.




TU fico08=820 8/25/17
EX fico08=812 9/05/17
EQ fico08=817 8/25/17
Garden since 4/5/2017
New Member
Posts: 13
Registered: ‎01-13-2014
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Re: Worth trying a refinance?

Thanks Sarge. I did a pre-qual with Capital One just now (i was doing other reading and stumbled accross that as an option). They approved me for a 6.2% rate. Still not worth pursuing?

Valued Contributor
Posts: 1,498
Registered: ‎08-12-2012

Re: Worth trying a refinance?


s2srea wrote:

Thanks Sarge. I did a pre-qual with Capital One just now (i was doing other reading and stumbled accross that as an option). They approved me for a 6.2% rate. Still not worth pursuing?


If they will loan you enough to pay off the loan that is currently at 10%, then that is a no brainer. Normally creditors that are not affiliated with the dealer will only loan you book value, as they do not have the added incentive of making a profit from the sale of the car. If you declare bankruptcy they stand to loose a lot of money and it is just too big a risk. If you are purchasing a New Honda Car for example, Honda finance has a greater incentive, often going as far as paying off a loan you are underwater on, and rolling it over into the new car payment. It is a risk they are willing to take to increase their market share, and it is creating a bubble much like the real-estate bubble that caused the bailout in 2008. Refi lenders simply do not have such an incentive to take on the risk of an underwater loan.




TU fico08=820 8/25/17
EX fico08=812 9/05/17
EQ fico08=817 8/25/17
Garden since 4/5/2017
Frequent Contributor
Posts: 316
Registered: ‎09-15-2016
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Re: Worth trying a refinance?

You could also try DCU's second chance car loan - they go over the value of the car and rates are much better,

FICO08 7/27/17 EQ-769, TU-767, EX-761
Gardening unit sometime in 2018
Valued Contributor
Posts: 1,616
Registered: ‎12-16-2014

Re: Worth trying a refinance?

Your 10k under water on this car so the likelihood of getting refinanced is pretty much zero, just too much negative equity .  What you could do it look at doing a personal loan or checking line of credit with NFCU for example and then pay down the balance to the point that you could do a regular finance.  You would have to do the math of what the average interest rate is between the two to determine if its worth doing.  What I would do is tighten my budget and make principle payments on the car, as much as you can and then when you get the payoff within 120% of the KBB value refinance with NFCU, DCU or Penfed.  It will save you a ton in interest.  

Gardening till 2018, Goal of 700's by the end of 2017
MyFico Scores Aug 2017: EQ 675 TU 695 EXP 698
New Member
Posts: 13
Registered: ‎01-13-2014

Re: Worth trying a refinance?

Hey Everyone. Thanks to everyone for the advice. I called DCU and you all were right, they only finance 100% of the retail value. So that wasn't really an option. I called CapitalOne back after the PreQualification (which asked for amount due on the loan among other things) and asked if there was anything that may prevent me from being officially approved. The lady said no (and I took it with a grain of salt, obviously) and moved Forward with the process. I was approved and got a new rate of 6.1% saving me about 3,500 on the life of my loan and lowering my payments by $50. In all, I thought it was a good move. Thanks especially to Sarge for letting me know of the 'no brainer' move. I may have been more cautious otherwise. 

Valued Contributor
Posts: 1,616
Registered: ‎12-16-2014
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Re: Worth trying a refinance?

Wow, that is great the Capone did your refi.  Great move for you.  No sense in paying one penny more in interest than you have to.   I would suggest hanging on to that car for a while so you can erase that negative equity, it is very common to have negative equity for the first few years of the loan, its great you were able to lower that APR with it hanging out there.

Gardening till 2018, Goal of 700's by the end of 2017
MyFico Scores Aug 2017: EQ 675 TU 695 EXP 698
Frequent Contributor
Posts: 316
Registered: ‎09-15-2016
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Re: Worth trying a refinance?

Sorry about DCU - I was going off their website that they go over.

 

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FICO08 7/27/17 EQ-769, TU-767, EX-761
Gardening unit sometime in 2018
New Member
Posts: 13
Registered: ‎01-13-2014
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Re: Worth trying a refinance?


Myrwyn wrote:

Sorry about DCU - I was going off their website that they go over.

 


Thanks Myrwyn. I saw their website too and thought the same. I still appreciate the lead! Smiley Happy

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