Best way to pay down auto loans

[Anonymous]

Currently my boyfriend and I have 2 joint auto loans, one from Feb 2015 w/ 11% interest and the other from Nov 2015 w/ 16% interest. At the time of both loans we needed vehicles so we took the best offer we could, but now that we're better off financially and our credit scores are rising we're looking to refi both, 1 into each of our names (mostly to help with DTI).

Both loans have never been late and since I believe interest accrues daily I pay half each paycheck on both (that's supposed to cut down on interest right?). Aside from refinancing both and paying each paycheck (if that really does cut down interest) is there anything else we can do to minimize interest and/or pay them off a little quicker? And as far as I know on my car's loan any extra money goes toward future payments up to 3 months then anything extra gets applies toward principle but idk about the other loan, I'll have to check.

[Anonymous]

Refinancing is definitely going to be your priority.  At the time of refinance, if you have extra money to put down that would be beneficial as well.  As far as extra money being sent in I believe every bank has different policies as to where that money is applied.  That would be a question for your current lienholder as well as your prospective one. 

[Anonymous]

Yea I thought that'd be the case. Do you know if there is any truth in paying half & half cuts down on daily accrued interest? I really wanna say interest accrues daily on my accounts so I thought the less days you hold a high balance, the less interest that accrues that billing cycle so more would go toward the principle. Maybe this isn't the case or maybe I've got it wrong.

[Imperfectfuture]

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@Anonymous wrote:
Yea I thought that'd be the case. Do you know if there is any truth in paying half & half cuts down on daily accrued interest? I really wanna say interest accrues daily on my accounts so I thought the less days you hold a high balance, the less interest that accrues that billing cycle so more would go toward the principle. Maybe this isn't the case or maybe I've got it wrong.

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This depends on the contract (see the auto loans section).  You will get the best auto rates from a local credit union.  I would also suggest looking into Alliant credit union.  They just offered me 1.74% on used, 1.25% on new.  I do not drive, but would love to pass it on.  

[Anonymous]

Do you have to be a member to get their loan? Unfortunately I used to be a CU member and when I lost my job in Sept 2013 my checking account & installment loan defaulted so I'm still reported in ChexSystems for the checking account until I pay it off (which I'm hoping to do in 2-3 months). That's why I thought it best not to apply for DCU since I've read good things about them on here but read that they hp for membership and check ChexSystems so I wouldn't be able to use the refi loan anyway.

[Imperfectfuture]

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@Anonymous wrote:
Do you have to be a member to get their loan? Unfortunately I used to be a CU member and when I lost my job in Sept 2013 my checking account & installment loan defaulted so I'm still reported in ChexSystems for the checking account until I pay it off (which I'm hoping to do in 2-3 months). That's why I thought it best not to apply for DCU since I've read good things about them on here but read that they hp for membership and check ChexSystems so I wouldn't be able to use the refi loan anyway.

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Must be member.  Most will check chexsystems.  That will make it tougher, because paid off does not help you get an account.  You will need to find local credit unions that do not check chexsystems.  They have some in Seattle, for example.  An agreement to open bank accounts despite chexsystems report.  Google opening accounts in your area or nationwide with a chexsystems entry.  Good news, it is gone from chexsystems in 2018 (five years after).  Bad news, most banks do not care if paid back, any entry gets you a no.

[Anonymous]

Was about to recommend DCU. Maybe give it a try and see what happen. Also I believe DCU do 2 HP, one for checking and one for the loan. Happens to me in Feb 2015. Found a car that I like and borrowed $7K from them. Scores was around 630s and I got a 4.39% rate.

[Imperfectfuture]

However, does BF have clear chexsystems? You may need to hold off on the loan in each name, and just use him.

[Anonymous]

Yes he has a clear ChexSystems. He likes to use the prepaid accounts instead of normal checking so he's clean.

[Imperfectfuture]

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@Anonymous wrote:
Yes he has a clear ChexSystems. He likes to use the prepaid accounts instead of normal checking so he's clean.

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So if he joins Alliant, then qualifies for 50 in credits.  Open savings first, within 90 days they will send offer to open checking.  In the interim, he does not have to wait for checking account for refinance.