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New Contributor
homebound14
Posts: 70
Registered: ‎08-28-2013
0

refinancing?? help

Hi,

I'm looking to refinance my vehicle (I think) currently I am in a 72month loan with a 21% apr!!! I know crazy, but i was desperate.

Can someone please explain to me how refinancing actually works and if anyone has an idea of what kinds of scores a bank or credit union would want to see. I at lease need my interest cut in half and payment lowered from the current $490 a month.

my current fico score is 560, and my ck fako 578

 

also i recently have obtained 2 cards: in july i got a care credit card, and in august i obtained a vs  card. not sure how long it willl take to increase my scores. but planing to refiniance in the next 2-3 months sooner if possible.

Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012
0

Re: refinancing?? help

I imagine the loan balance is significantly higher than the value of the vehicle.

 

You should have equity before a refi. 

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:21    


     $14k          $8.5K          $7.5k          $7.5k         $6.5k             $6k             $5k            $5k             $5k              $5k           NPSL       @ 0%
New Contributor
homebound14
Posts: 70
Registered: ‎08-28-2013
0

Re: refinancing?? help

my balance is about.21,000 so I definitely have no.equity but the longer I keep the vehicle the more upsidedown I will become. I'm mostly paying interest.
Anyone have any advice on getting out the loan should I attempt a trade in.insteasd?
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Valued Contributor
HoldingOntoHope
Posts: 1,057
Registered: ‎09-29-2009
0

Re: refinancing?? help

Until you fix the problems that are holding down your credit scores you are not going to have any viable options. You need to make sure you are keeping your current accounts paid on time and making the loan payments on your vehicle. The only way you are going to cure the negative equity situation in the vehicle is to make larger payments than the monthly due.

 

With your credit scores I would guess that you have problems in your credit history. If you go to the Rebuilding Your Credit forum you may find some answers on how to deal with those and improve your scores. But the biggest cure for bad history is time and good history. Consider your current situation as the penance you need to pay for past mistakes. Trading in with negative equity is just going to compound the problem further. You won't get a (much) better rate and you will just have more to overcome. Stick it out and you can make the future better.:smileywink:

Best financial advice I ever got: "Just imagine what an adult would do and do that."

Starting Score: 500's
Current Score: EQ 701 (FICO) TU 721 (FICO) EX 715 (Quizzle)
Goal Score: 760 ALL


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New Contributor
homebound14
Posts: 70
Registered: ‎08-28-2013
0

Re: refinancing?? help

thanks so much. i know your right! guess I'll just have to live with my past credit mistakes and move forward from here.

Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012
0

Re: refinancing?? help

If you make principle only payments in addition to your regular payment. You will pay down the loan quicker and get yourself into equity.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:21    


     $14k          $8.5K          $7.5k          $7.5k         $6.5k             $6k             $5k            $5k             $5k              $5k           NPSL       @ 0%
Valued Member
Poki
Posts: 81
Registered: ‎09-01-2013
0

Re: refinancing?? help

[ Edited ]

Lenders often look at your credit profile, but not just that, they look at your car's value. Not uncommon to use NADA clean retail, or sometimes even NADA trade-in value; they may use Kelly values. If you are asking to borrow more than what your car is worth, it can be difficult to get approved.

 


homebound14 wrote:
my balance is about.21,000 so I definitely have no.equity but the longer I keep the vehicle the more upsidedown I will become. I'm mostly paying interest.
Anyone have any advice on getting out the loan should I attempt a trade in.insteasd?

Trading in never (usually) benefit the consumer, for dealership always offer less for your car than its "worth" (its a fair practice, considering their business is to make a profit). This would just put you deeper into the hole. I think you know this, so it would be better to just pay it off.

 

Do you at least like the car? :smileytongue: If it helps, once it's paid off you could private sell it for a higher profit than someone else who trades the car in; more work/risk involved, but it could pay off.

"Neither a Borrower Nor a Lender Be"
New Contributor
homebound14
Posts: 70
Registered: ‎08-28-2013
0

Re: refinancing?? help

yes i do really love the car, just not how much it will cost me in the end.

so i was thinking to get out of it sooner than later.

because it was purchased through carmax, i know the way they do there loans basically the longer i have the car the more it will cost me since the intrest is accumulated per month.

for instance my loan pay off doesnt include the interest for the duration of the loan, it only incudes the to date.

 

New Contributor
homebound14
Posts: 70
Registered: ‎08-28-2013
0

Re: refinancing?? help

i currently owe appox 1k more than the kbb of my veh, however i know trade in or a dealership will not pay what its worth

Community Leader
Valued Contributor
HoldingOntoHope
Posts: 1,057
Registered: ‎09-29-2009
0

Re: refinancing?? help

If you at least make sure the monthly payments are made then as you go through the loan more will start to go to principal than interest. And depreciation on the car will slow as the model year gets older. The highest depreciation is in the first few years assuming you are not putting on excessive mileage or wear and tear. So you will start to build some equity soon if you are only $1000 under right now.

 

Principal payments or payments above the monthly due will accelerate the process and put you in  a positive position sooner as well as reducing the total interest over the life of the loan. Your on the right track and good behavior now will make your next auto purchase a much better experience.

Best financial advice I ever got: "Just imagine what an adult would do and do that."

Starting Score: 500's
Current Score: EQ 701 (FICO) TU 721 (FICO) EX 715 (Quizzle)
Goal Score: 760 ALL


Take the FICO Fitness Challenge


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