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which loan would be better

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Chezy1025
Regular Contributor

which loan would be better

Hello, I was offered two refinance options with my credit union. my current loan is 70 months left and 360 a month. Credit union offered me 60 months at 305 or 36 months at 450. I can pay 450 each month. My question is which option is better? Should I take the 60 months and pay 450 a month or take the 36 months and pay 450? Is there any difference or advantage to either? Thanks
Last HP 03-24-2016 Gardening until I pre-qual for CSP or Venture



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Current Score: 685 04-03-16
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Anonymous
Not applicable

Re: which loan would be better

Without knowing the APR and the amount refinanced, I would say the longer term and less payment. This allows the flexibility to pay the $450 a month if you can without the obligation each month, should life get in the way. If you maintain the increased payment you save a lot on interest by paying off the loan 2 years early. Just my 2 cents.

Message 2 of 4
Chezy1025
Regular Contributor

Re: which loan would be better

Both had the same rate of 14.5. Which is sadly much better than my current loan. I was thinking the same thing. Choose the longer term so I can pay the 450 or stick with 305 if I need a little extra money. Thank you!
Last HP 03-24-2016 Gardening until I pre-qual for CSP or Venture



Starting Score: 485 06-20-14
Current Score: 685 04-03-16
Goal Score: 700


Take the myFICO Fitness Challenge
Message 3 of 4
SamsungHDTV
Established Contributor

Re: which loan would be better


@Chezy1025 wrote:
Both had the same rate of 14.5. Which is sadly much better than my current loan. I was thinking the same thing. Choose the longer term so I can pay the 450 or stick with 305 if I need a little extra money. Thank you!

Yup, consider even paying more than 450 with that kind of interest rate. Choose the 60 month term for sure. If you pay 450, it will be done in 36 months, or may more and be done sooner.

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