I bought a 2006 Nissan Titan back in May of last year and owe roughly $16,500. on it with 5 years remaining at an interest rate of 9%. I called in to see about a refi to a lower rate, and I was offered a refinance with cash out to pay off my credit cards. I have about $11,000.00 in CC debt and I was offered a refinance for $26,500.00 which would allow me to pay off the majority of my credit cards which I no longer use. The interest rate would jump on the truck loan to 15.5% for 72 months, but it is a lower interest rate than that on the credit cards. My new payment would be $579.00 up from $349.00, but I would be eliminating $300.00+ in minimum credit card payments each month.
Does anyone have any suggestions here. The truck is worth the $26,500 I am being offered and I know it would also improve my FICO score by not having so much revolving debt.
Any major drawbacks here or things I need to know before going through with this. Any advice would be greatly appreciated.
I would be VERY careful about doing this refinance, thereby raising your interest rate about 6% (from 9% to 15%) and making your "unsecured" credit card debt now secured by your truck. I know it would be great to be rid of your credit card debt, but why turn that unsecured debt into secured debt, with your truck now at risk if you should become unable to pay? I would feel much better if you would simply contact each of your credit card companies and try to negotiate down your interest rates. Food for thought...