Advice - Refinancing an COAF Auto Loan, halfway through?

[Anonymous]

Hi;

I have an auto loan with Capital One. Due to my mediocre credit at the time (unsure of scores then) I qualified only for a ridiculous interest rate (I believe 16%) on an $18K loan. I went for it because I had to... and because I really needed a car.

I now have about 2 years left on this loan, with a balance of $11K.

I have since pushed my credit score up over 700 - been around 707 for six months or so... and this is expected to go up even more shortly (about to clear myself of all CC debt). I believe this will qualify me for a significantly better loan elsewhere.

Is it worth me refinancing this now? I know that it would be if I'm still going to be paying interest on that 11K, but I'm not sure if I am paying interest still or paying principal. I know that if interest is still accruing, this is probably worth me doing... but I don't know if that is the case or not. I don't know the math, here. Help!

Is refinancing going to hurt my credit? Note that I am able to make the payments on the current loan, I'm just looking to save some money on interest over the next few years.

Advice?

[renaboo01]

Hi and welcome to the forums. When you refi a your auto loan, you will get a decrease in points to you current scores. This is because you are a creating a new acct on you credit file. You said you owe $11K. How much is the car worth now? If you owe more then the car is worth, forget about the refi because you will end up having to come out of pocket to get out of negative equity. As far as paying interest, you still are. However more of you money is going toward the principle. Let me know if you need any more help.

EQ is now 613-FEB 08

Message Edited by renaboo01 on 02-28-2008 02:01 PM

Message Edited by renaboo01 on 02-28-2008 02:02 PM

[Anonymous]

Thanks for the input.

The car is worth more than the balance, yes.

I think my question re: interest is - when they quote 11K, does that mean total owed, or just principle?

And re: credit score - adding a new loan should be only a smallish hit on the score, right? One that should recover in a few months, correct?

Thanks for the help!

[Takunda1]

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cachehit wrote:

Hi;

I have an auto loan with Capital One. Due to my mediocre credit at the time (unsure of scores then) I qualified only for a ridiculous interest rate (I believe 16%) on an $18K loan. I went for it because I had to... and because I really needed a car.

I now have about 2 years left on this loan, with a balance of $11K.

I have since pushed my credit score up over 700 - been around 707 for six months or so... and this is expected to go up even more shortly (about to clear myself of all CC debt). I believe this will qualify me for a significantly better loan elsewhere.

Is it worth me refinancing this now? I know that it would be if I'm still going to be paying interest on that 11K, but I'm not sure if I am paying interest still or paying principal. I know that if interest is still accruing, this is probably worth me doing... but I don't know if that is the case or not. I don't know the math, here. Help!

Is refinancing going to hurt my credit? Note that I am able to make the payments on the current loan, I'm just looking to save some money on interest over the next few years.

Advice?

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My recommedation to you is to call Capital One Auto & tell them how your score has improved, and you would like to remain a client. Tell them to revise the terms of your current loan to a lower APR  to match your new credit score. I've come across several files that show that the terms of the loans have been revised. If you call and you speak to a level one associate who tells you that can't be done, call back & ask to speak to a Manager. I am almost positive you'll win. This is hoping all your payments have been on time & you have faxed a copy of your ttle to COAF showing that they are lien holder on you title. If you haven't done that, they will not work with you. This is a new policy that we just implemented.

Good luck.

[renaboo01]

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cachehit wrote:

Thanks for the input.

The car is worth more than the balance, yes.

This is good, so it may be worth the re-fi.

I think my question re: interest is - when they quote 11K, does that mean total owed, or just principle?

If they say this is what you owe, then that is what you owe. However, you will still pay intrest on the $11K until you finish paying it off. For example, say you car note is $380 a month. (Just messing with numbers here) $260 would go toward the princple, ie towards the $11K and $120 would go towards intrest. So as long as you have a loan you are still paying some intrest. Just not as much as you were when the loan was new.

And re: credit score - adding a new loan should be only a smallish hit on the score, right? One that should recover in a few months, correct?

That is correct! (I re-fi my car and lost 6pts, but gained it rigth back as soon as I made the first payment on my new loan.)

Thanks for the help!

No problem.

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