topic Re: When should I refinance? in Auto Loans

When should I refinance?

js0319 — Thu, 22 Mar 2012 15:25:48 GMT

I have two auto loans that my wife and I financed within the past year:

Capital One - Opened 8/2011 for 72 mos. @ 15.83%

Americredit Financial (GM Financial) - Opened 11/2011 for 60 mos. @ 20%

Any suggestions on how long I should wait to refinance? My wife and I are working on building our FICO scores right now, and we're both in the mid 500's. We have paid all of our payments on time. I was thinking we should wait a year on each of them to show 12 months of timely payments for each, and that would allow time to raise the score too.

Or would you suggest achieiving a certain score first? I'd like to get both rates below below 10%, if possible. Also, any suggestions of companies that would offer more competitve rates? Anyone know if Capital One lower the APR without having to refi?

Re: When should I refinance?

pizzadude — Thu, 22 Mar 2012 15:59:35 GMT

I'd go ahead and start looking into a refi ~ you should try to get out from under those interest rates as soon as possible.

In terms of FICO scoring, there isn't any benefit to paying the loans early or doing a refi ~ it actually may lower your score due to inquiries and lower AAoA, but IMO getting a better interest rate outweighs that.

Do you have any credit cards accounts open, and what does your revolving utilization look like ?

Re: When should I refinance?

Anonymous — Thu, 22 Mar 2012 16:05:10 GMT

@js0319 wrote:
I have two auto loans that my wife and I financed within the past year:

@Anonymous One - Opened 8/2011 for 72 mos. @ 15.83%
@Anonymous Financial (GM Financial) - Opened 11/2011 for 60 mos. @ 20%

Any suggestions on how long I should wait to refinance? My wife and I are working on building our FICO scores right now, and we're both in the mid 500's. We have paid all of our payments on time. I was thinking we should wait a year on each of them to show 12 months of timely payments for each, and that would allow time to raise the score too.

Or would you suggest achieiving a certain score first? I'd like to get both rates below below 10%, if possible. Also, any suggestions of companies that would offer more competitve rates? Anyone know if Capital One lower the APR without having to refi?

Some companies will refinance their own loans. I don't know if Cap One will do this or not. Knowing Cap One though, I would highly doubt it. Also, I recently refinanced a loan with GM Financial (used to be Americredit). Based on my experience with them, they wouldn't even consider a refi of their own loan. I don't know that you will have a lot of luck though right now with your scores still in the mid 500s.

I would also be worried about the value of your cars. Did you guys pay enough on these through down payment and/or extra payments that you are not upside down on the cars? It is hard to refinance when you are upside down.

Do you have a relationship with any credit union? That is probably your best bet ultimately. If you can't get a refinance, definitely pay as much towards these loans as you can. With those interest rates, every extra payment you can make will save you a lot of money long term. Best of luck.

Re: When should I refinance?

js0319 — Thu, 22 Mar 2012 16:13:01 GMT

Revoling utilization is pretty high, around 162% - that's due to two CO CC's totalling $3399 on CL of $2100 between both accounts, but that's also solely based on how it's reported to EQ. I am working on settling those accounts to get the balances down to $0, thus lowering my utilization to 0% on revolving accounts (those two CC are the only revolving accounts reporting). I also have a Cap 1 secured card w/ a $300 limit and $0 balance.

Who would you suggest trying to refi through? I know my scores are too low right now to get any decent rates.

Re: When should I refinance?

Anonymous — Thu, 22 Mar 2012 16:17:44 GMT

@js0319 wrote:
Revoling utilization is pretty high, around 162% - that's due to two CO CC's totalling $3399 on CL of $2100 between both accounts, but that's also solely based on how it's reported to EQ. I am working on settling those accounts to get the balances down to $0, thus lowering my utilization to 0% on revolving accounts (those two CC are the only revolving accounts reporting). I also have a Cap 1 secured card w/ a $300 limit and $0 balance.

Who would you suggest trying to refi through? I know my scores are too low right now to get any decent rates.

Is your capital one reporting? you said the other two were the only revolvers reporting. Is the Cap 1 just new then and hasn't reported yet?

If it were me, I would wait until your Cap 1 is at least 6 months old and your utilization is under 30%. Until that happens, I don't see much of a chance at a decent rate. That utilization is absolutely destroying your scores I'm sure. When you get that under 30%, I would expect to see a huge increase in your scores.

Re: When should I refinance?

pizzadude — Thu, 22 Mar 2012 16:19:27 GMT

@js0319 wrote:
Revoling utilization is pretty high, around 162% - that's due to two CO CC's totalling $3399 on CL of $2100 between both accounts, but that's also solely based on how it's reported to EQ. I am working on settling those accounts to get the balances down to $0, thus lowering my utilization to 0% on revolving accounts (those two CC are the only revolving accounts reporting). I also have a Cap 1 secured card w/ a $300 limit and $0 balance.

Who would you suggest trying to refi through? I know my scores are too low right now to get any decent rates.

Ok ~ the revolving utilization is what is killing your score. And the CO'd accounts as well. You may want to also open another credit card account so that you have at least two positive open CC tradelines.

You might want to take a tactical approach to first deal with your revolving util, then tackle the refi ~ your scores should look better after you have paid down those accounts, you might consider negotiating a PFD. If not then send GW letters once they are paid.

Navy Federal is a great CU to work with, if you can qualify to join.

Re: When should I refinance?

js0319 — Thu, 22 Mar 2012 16:21:12 GMT

I had two vehicles that were financed through a credit union up until early 2008, until they were both repossessed on the same night. The credit union is reporting to the CRA's, but they both show a $0.

Re: When should I refinance?

pizzadude — Thu, 22 Mar 2012 16:42:33 GMT

@js0319 wrote:
I had two vehicles that were financed through a credit union up until early 2008, until they were both repossessed on the same night. The credit union is reporting to the CRA's, but they both show a $0.

Ok, well that makes it more challenging ~ have you tried any GW letters to remove the Repo or late pays on these Auto loans ?

Re: When should I refinance?

js0319 — Thu, 22 Mar 2012 17:18:26 GMT

I have not. Would I send the GW letter to the credit union and keep my fingers crossed? I've been a little skeptical of doing this because, even though the cars were repo'd in 12/2007, it's reporting as a repo in 3/2008. The reporting on these accounts seems to be about 3 months behind the actual occurrences. I don't want to awaken any giants, especially since the collections for these accounts aren't showing up on either of our CR's. I guess at any time the CA could report these, and I'd have two new collections on my CR, right?

Re: When should I refinance?

pizzadude — Thu, 22 Mar 2012 17:24:23 GMT

@js0319 wrote:
I have not. Would I send the GW letter to the credit union and keep my fingers crossed? I've been a little skeptical of doing this because, even though the cars were repo'd in 12/2007, it's reporting as a repo in 3/2008. The reporting on these accounts seems to be about 3 months behind the actual occurrences. I don't want to awaken any giants, especially since the collections for these accounts aren't showing up on either of our CR's. I guess at any time the CA could report these, and I'd have two new collections on my CR, right?

Ok, I assumed that they were paid. If they are unpaid, I'd leave it alone because it is possible that the CU still has them and might start to come after you. And yes a CA might pop up anytime as well.

Also I would recommend looking up the SOL for this debt ( prob written contract ) for your state to see where you stand.

Re: When should I refinance?

js0319 — Thu, 22 Mar 2012 17:30:22 GMT

The SOL is 4 years, and repo's happened in 12/2007, but as I said they are reporting the repo's in 3/2008. I believe SOL is, or is almost, over. Should I try to GW repo's starting next month since it's absolutely past the 4 year SOL?

Re: When should I refinance?

pizzadude — Thu, 22 Mar 2012 17:49:14 GMT

@js0319 wrote:
The SOL is 4 years, and repo's happened in 12/2007, but as I said they are reporting the repo's in 3/2008. I believe SOL is, or is almost, over. Should I try to GW repo's starting next month since it's absolutely past the 4 year SOL?

Nothing wrong with sending GWs, but IMO it is much harder to succed when you haven't paid. Instead, you might consider sending a combined GW/PFD request whereby you pay them something at least.

And the CU or a CA can still come after you for the unpaid debt even when it is past SOL. SOL is just your defense in court should they file a lawsuit against you.

Re: When should I refinance?

Anonymous — Fri, 23 Mar 2012 03:33:37 GMT

Just refinanced my car two days ago.

Originally had a loan from Chase bank with APR 9.15 ( that was my first ever auto loan) and my credit history was only 4 years old built by credit cards.

The other day I received an offer from local CU about refinancing my car, I usually throw out these offers, but for some (or no) reason I kept it and applied online. I was approved and got my car refinanced by next day.

Now I have 4.45% and $55 less on my car loan.

I would suggest to keep your current loan for a year and refinance after year, that case you will avoid penlty fees if your bank has one also your credit history will be much solid and chances of approval is higher.

Don't pay more for your loans, refinance if you can.

Re: When should I refinance?

marty56 — Fri, 23 Mar 2012 09:06:06 GMT

CUs are a great place to find good refi rates so I would also check a local CU in your area.

Re: When should I refinance?

js0319 — Sun, 20 May 2012 03:17:59 GMT

Update:

I refinanced both mine and DW's car with a local CU.

I was paying $430/mo. (@ 20%), now I pay $437/mo. (@ 8.74%) - but the car will be paid off 16 months earlier. I was able to get a lower rate (as opposed to 10.74%) by shortening the term to 42 months.

DW was paying $479/mo. (@ 15.83%), now it's $413/mo. (@ 10.74%) with 63 months remaining.

Together, we're saving over $9k in interest by refinancing!

Re: When should I refinance?

Anonymous — Sun, 20 May 2012 05:02:29 GMT

@js0319 wrote:
Update:

I refinanced both mine and DW's car with a local CU.

I was paying $430/mo. (@ 20%), now I pay $437/mo. (@ 8.74%) - but the car will be paid off 16 months earlier. I was able to get a lower rate (as opposed to 10.74%) by shortening the term to 42 months.

DW was paying $479/mo. (@ 15.83%), now it's $413/mo. (@ 10.74%) with 63 months remaining.

Together, we're saving over $9k in interest by refinancing!

That is just outstanding! Congrats on the huge savings.

Re: When should I refinance?

iCoop — Sun, 20 May 2012 13:46:27 GMT

@js0319 wrote:
Update:

I refinanced both mine and DW's car with a local CU.

I was paying $430/mo. (@ 20%), now I pay $437/mo. (@ 8.74%) - but the car will be paid off 16 months earlier. I was able to get a lower rate (as opposed to 10.74%) by shortening the term to 42 months.

DW was paying $479/mo. (@ 15.83%), now it's $413/mo. (@ 10.74%) with 63 months remaining.

Together, we're saving over $9k in interest by refinancing!

That's great news!!! Post your refinance approval info in the approved thread as inspiration for others.