topic Re: Refinance when it's upside down? in Auto Loans

Refinance when it's upside down?

Anonymous — Tue, 10 May 2016 23:55:22 GMT

Hi all. A little over 3 yrs ago my credit was horrible (worse than it is now -mid 600's) and I got 2 new cars. My trade had a ton of equity and they have me 10% and I had to sign with my daughter to get hers (she hd no credit). No trade in and the interest rate was 15%.

I was able to refinance mine yesterday for 7.5. Still not great but better for now. However my daughters balance is at 14,500 and they (CapOne) said it was way too upside down to refinance (by like 2,500). She still isn't established enought to get a loan, but her payments are $550 and she's never going to get anywhere with that interest rate (she makes every payment, never late).

Is there any place that's more likely to work with a situation like that? I was also approved to by a new car thru CapOne yesterday, and I was going to just trade hers in and eat the negative in my loan, but I'm planning to buy a house beginning of the year and im going to wait.

Thanks so much!

Re: Refinance when it's upside down?

RonM21 — Wed, 11 May 2016 04:23:24 GMT

Not sure what your options are. I'm not the best person to.answer this question, but I.wonder if getting a loan with maybe a CU at a way lower rate to cover the cost would be an option?

Re: Refinance when it's upside down?

Anonymous — Wed, 11 May 2016 16:16:42 GMT

No worries and thanks for replying anyways! I was hoping someone had a good lead...

Thanks again

Re: Refinance when it's upside down?

Anonymous — Wed, 11 May 2016 19:50:09 GMT

The problem is in your loan-to-value. With $2500 underwater on a car worth $12000, that's 121% loan-to-value, and out of the range for almost any lender on a used vehicle.

15% is a staggering rate, definitely see why you want to refi that one - but you'll need a lower LTV... is it possible to make a principal payment in the range of $1000? That would lower your LTV to about 112%, much more feasible with lenders. And are you dealing with the actual payoff amount, rather than the remaining balance? With a high interest rate, early payoff may actually cause a fairly large reduction in amount due by causing elimination of interest, especially while the loan is relatively new (you primarily pay off interest in the first couple of years, and principal later in the loan life).

Re: Refinance when it's upside down?

Anonymous — Thu, 12 May 2016 14:13:51 GMT

Yeah...I will work away on that like you said. I gotta get that interest rate down.

Re: Refinance when it's upside down?

Anonymous — Thu, 12 May 2016 21:11:49 GMT

@Anonymous wrote:
Hi all. A little over 3 yrs ago my credit was horrible (worse than it is now -mid 600's) and I got 2 new cars. My trade had a ton of equity and they have me 10% and I had to sign with my daughter to get hers (she hd no credit). No trade in and the interest rate was 15%.

I was able to refinance mine yesterday for 7.5. Still not great but better for now. However my daughters balance is at 14,500 and they (CapOne) said it was way too upside down to refinance (by like 2,500). She still isn't established enought to get a loan, but her payments are $550 and she's never going to get anywhere with that interest rate (she makes every payment, never late).

Is there any place that's more likely to work with a situation like that? I was also approved to by a new car thru CapOne yesterday, and I was going to just trade hers in and eat the negative in my loan, but I'm planning to buy a house beginning of the year and im going to wait.

Thanks so much!

Why isn't your daughter score able to buy it herself? If it's been 3 years and on time payment she should be good. Also capital one will not refinance its own loan. Unless I'm mistake and original isn't from Capone and ur trying to do refi with cap one