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So im about to finance a car with really bad credit.
I know im going to need to refinance in 6-12 months but how does it really work?
I got a letter in the mail from cap one that offered to refinance. I went online and it said it was a soft pull. It was such a simple process. I never even spoke to anyone, it was all done online.
so theres a chance companies wont refinance me if my interest rate is too high?
im paying 25% apr lol .
yes in used cars there is a Loan to Value number or LTV. based on the state you live in, they will either go off Black Book or NADA book value to find the clean trade amount. Just an example with round numbers because maths are hard.
If you want to finance a $20000 car but the book says it is valued at $18000. Then your LTV will be 111%. many banks want to go no more than 110%, but some will go up to 140% with good credit. So this is where your FICO score comes into play. Many times though a credit union that you have a good relationship with will take a chance anyway and step up to a higher LTV in order to capture your auto financing for the current vehicle and probably get you for the next two or three cars you finance. I hope this helps.
**bleep** , These guys are charging me $588 / mo for 60 months , on a $14,000 car...
Thats around $30k id be paying.
Would it be impossible to refinance a car of that nature?
at 25% APR you are probably paying at least 50% of your monthly payment just to interest and not paying down the principal. so a re-finance is going to be tough. I think you should get an intermediate step in here before you get deeper in debt. Assuming you've paid you auto loan perfect you can get a captive lender such as GM Financial, Chrysler Capital, Ford motor Credit to use their special APRs often down in the low single digits. The downside is you would need to buy a new car and use the rebates to offset your negative equity in your current auto loan. But this would be beneficial because you would be paying a car payment for a car not a car payment that is half going to interest. Just an option.
You can get a guess on what your car is worth from kelly Blue Book, but no dealership is going to give you that in trade. they may get fairly close though, so it gives you better understanding.