topic Re: Refi with 175% LTV? in Auto Loans

Refi with 175% LTV?

SubstandardAndPoorers500 — Fri, 22 Feb 2019 20:51:49 GMT

I have a feeling I'm stuck. I got an auto loan through VW Credit for 33K back in 17 at 16.99%. I planned from the get-go to just refi in 6 months to a year. I had 1 "late" payment due to the Hurricane Irma right in 17, but I believe VW fixed that. Other than that I've bee on time. The problem is, no matter where I go, it doesn't seem to be an issue of credit necessarily, but my LTV is at 175%. I already see from the loan that for every $100 I knock down on the principle, I pay about $100-$150 additionally in interest. I'm kind of at wit's end on what to do. I'm military, so the only way I could see an end in sight is to re-enlist for some fat bonus and refi then, but I'm growing weary of Army life. Is there some lender out there that I should look into? Do I need to try and take out a large personal loan to try and knock down the LTV? If not, I'll be credit card debt free after tax refund comes in, and I'll just be resigned to try to pay extra on the principle until I hopefully can finally catch a break.

Re: Refi with 175% LTV?

Remember0 — Fri, 22 Feb 2019 21:57:47 GMT

Sorry to hear you are feeling at your wits end.

Can you share a bit more details:

-Are the current FICOs in your score accurate?

-What car is it exactly (year, make, model, and appx. miles)?

-What is the current principal balance you owe to VW Credit?

Finally thanks for your service. I'm sure you already have looked into this, but if you haven't looked into SCRA protections, please clarify if you purchased the vehicle before you joined the military or if it was after you joined.

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Fri, 22 Feb 2019 22:13:40 GMT

The only FICO I could probably say is accurate is Experian, since I pay them for their credit monitoring. The others are based on free reports. The car is a 2017 VW GLI with 40k miles. I drive a lot, and being from Florida and stationed in Kansas doesn't help at all. I racked up about 5500 miles in the month of December alone visiting family. The issue is my previous car I rolled about $5500 in negative equity(car having high miles and an accident) to my new loan, added in with the high interest rate I got a double whammy. I purchased the car after I entered service, and even though I'm currently overseas, I asked VW Credit for SCRA just to see what they'd say and they declined, which I understand they have every right to do so. My principle balance is $31,572.12, so really haven't paid anything but interest really.

Re: Refi with 175% LTV?

Remember0 — Fri, 22 Feb 2019 22:49:31 GMT

Yes, I think VW Credit is able to decline if you bought the vehicle after you entered service.

I show NADA retail on this vehicle at $19,625. At a CU like DCU, they would refi 120% (though they might not work with your scores) so that equals $23,550.

As you stated, this leaves you with a ~8k hole and I'm frankly not sure there is an easy way to bridge given the scores. (Any personal loan you borrow would likely be at very high interest.)

This is a longshot: Have you tried calling NFCU (who'd work well for your scores) and asking just how much they are willing to lend? No need to apply, I hear they are friendly and can take down your car info and tell you amount they can refi. At least that way you know how much in the hole you are.

Perhaps other members in your shoes will have other ideas, but unless there is some way for you to borrow $7 - 8k on a personal loan at reasonable terms, I just don't see how this gets refi'ed.

Re: Refi with 175% LTV?

Remember0 — Fri, 22 Feb 2019 22:53:55 GMT

Sorry for multiple replies...I'm just wondering if NFCU maybe would be willing to give you a personal loan for the difference? Their highest interest rate on personal loans is 18% and your income is pretty much as solid as they come so it's not a terrible loan to make.

Since your VW Credit APR is 17%, it would make sense to take a personal loan at 18% for the underwater amount to potentially save a lot of interest on a refi'ed auto loan.

I am somewhat grasping at straws here, but short of you coming up with $7 - 8k, I think NFCU is one of the few (only?) lenders that may be able to make this work (still a bit of a moonshot). But I don't think you have a lot to loose by calling them and asking. They may not come up with the auto loan + personal loan idea when you call them but you can try seeding in their head to see if in the art of possible.

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Fri, 22 Feb 2019 23:21:40 GMT

I did try that initially with NFCU and USAA. The lady with NFCU finally told me frankly their LTV is 120%(after being denied twice in the past), and I believe USAA based on the parameters they gave me(through a counter-offer) are probably at 120% too, possibly 130%. I think the personal loan may be the best way to go then. I may start scouring the Personal Loan board to see if I can find any lenders that may work with my scores. I can afford my car payment as things currently sit, and I must be doing something right as I'm about 30 days away from being Credit Card debt free. I'm thinking more long term as I have roughly 18 months left til I get out of the Army, and while sure I can move back in with family, I'd prefer not to. But this car payment is going to have to go down first. I may see what I can do to pay extra on the principle, and then right before I leave the military look into a personal loan where my scores should definitely be above 650 across the board. My "nuclear option" would be maybe adding another 12-18 months on to my contract just for the purpose of getting a small bonus that I can add some cash to if necessary to get below 120%.

Re: Refi with 175% LTV?

Remember0 — Sat, 23 Feb 2019 04:31:32 GMT

Sounds like a good plan.

Congrats on paying off your CCs. Maybe once they are paid off, you can take some of the money you were using to pay down CCs and direct towards the auto loan? Any amount will help especially at the high APR to bring down principal.

BTW you never really mentioned why your scores are in the 630s? Mind if I ask? Once I knew of someone in a similar position and it turned out it was 5 medical collections and given he had some cash to work with, I sent him a PM with instructions and he was able to get down to 1 collection on his report and increase FICOs pretty significantly.

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Sat, 23 Feb 2019 04:49:06 GMT

My scores are mainly from mismanagement of credit back in my early 20s. I have maybe 4 collections left on my reports but I'm not sure if I should pay them off or ride them out to the 7 year mark. My focus has been on the active accounts so far.

Re: Refi with 175% LTV?

Remember0 — Sat, 23 Feb 2019 05:26:14 GMT

Got it, that makes sense. If you become interested in trying to see if they can be removed, there's a lot if resources here (and on the competing credit forum if I'm allowed to say that) you can research. Sometimes though, especially if they will fall off sooner than later and the amounts are substantial, best to let a sleeping bear lie and focus on active accounts.

Re: Refi with 175% LTV?

Remember0 — Sat, 23 Feb 2019 05:28:24 GMT

To add: just paying them off won't help too much I suspect. If you're willing to pay, I'd recommend you do so only after negotiating a pay for delete (PFD) with them. There's guides here and elsewhere online on how to do that.

The decision of whether it is worth it to PFD or just let them age off is up to you.

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Sat, 23 Feb 2019 12:17:42 GMT

I'll do the research on that thanks. As my credit scores increase, would you suggest maybe a lease down the road? Obviously rolling into another finance would be disastrous, but my long term plan was maybe at the 54-60 month mark trading it in for Audi, that would hold the remaining negative equity better.

Re: Refi with 175% LTV?

Remember0 — Sat, 23 Feb 2019 17:25:45 GMT

Frankly I don't know what your income looks like. If you're making more than 75k or 100k per year then I think an Audi lease is probably fine. If not in the six digits, I personally wouldn't recommend an Audi or fancy car. Plenty of cheaper, very reliable cars (eg Accord, Civic, Camry...) out there that would be more financially wise imo. Cars are depreciating assets and having a large one compared to your income really makes it hard to build wealth/savings.

Not sure what you mean by hold the negative equity better...European cars depreciate quickly so I would think the opposite. Besides after 60 months of payments, I dont think you'll be very underwater here.

In terms of lease it's sort of a math equation you just need to work out (see my FAQ in this thread and make liberal use of the leasehackr lease calculator). As an example, Kia is offering 4k of lease incentives on the Forte that you don't get if you buy. If I were in the market for a Forte, I'd lease and then immediately refi / buyout with my preferred CU the week I drove off of a dealers lot. Leasing also frequently makes sense for European cars because they struggle to hold value and there's often pretty juicy incentives offered.

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Sun, 12 May 2019 06:29:23 GMT

Resurrecting my topic as my situation has altered a bit.

So I recently got approved for the Discover It card and they gave me $10,500 off rip with a 0% introductory for the first 14 months. I'm seriously thinking about taking $4000-$5000 of it for a cash advance and dropping it on the car so I can refi. I'll have a lower interest rate and I should have some positive equity no more than a year later. On the other hand, I can aggresively pay down Discover for that introductory 14 months and then take the "hit" for the second year if I don't pay it off within the introductory period. My math may be a little sketchy but say I pay it off in 6 months that makes for a relative interest of about 4-6%? Is this a smart move?

Re: Refi with 175% LTV?

Anonymous — Mon, 13 May 2019 05:19:45 GMT

First thank you for your service. Your in a tough spot but your instincts to use another financial tool to get the LTV down enough to refi exactly what I would do. I am not sure if Discover will let you do a cash advance at 0%, generally those introductory rates are reserved for purchases and balance transfers but it is certainly worth considering. The other option you could consider is a checking line of credit with NFCU, the rate is generally around 9% but that can be a good tool to get you where you want to go.

Let us know how this works out.

Re: Refi with 175% LTV?

Anonymous — Mon, 13 May 2019 16:18:17 GMT

Try Cap One as well

Re: Refi with 175% LTV?

Anonymous — Mon, 13 May 2019 16:41:55 GMT

Hi Substandard,

I actually work at a dealership as a Finance Director in Kansas so I might be of some insight.

What's your payoff balance, estimated TU score, vehicle, mileage and city of residence?

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Mon, 13 May 2019 17:04:06 GMT

It's a 2017 VW GLI with 40,140 miles

Payoff is $30,421.45. Financed through VW Credit.

My estimated TU is 660

I'm currently overseas right now but I'm stationed at Fort Riley, all my mail/bills however still go to my Home of Record in Florida.

Re: Refi with 175% LTV?

Anonymous — Mon, 13 May 2019 19:37:27 GMT

Alright, I'm pulling up NADA Clean Trade: $15975, NADA Clean Retail: $18500.

Do you have any cancellables you can get rid of? (GAP, Extended Warranties, etc.) I can't imagine you being this upside down from just an MSRP purchase and sales tax.

At a 660 Transunion you'll score Tier A/B with most lenders - I know U.S. Bank will pick you up and they allow for 145% of NADA Clean Trade which might be your best bet. I would recommend doing a balance transfer for a decent chunck of your auto loan balance to your Discover and refinancing or hopping in a lease and using dealer cash to cover up the negative equity.

Re: Refi with 175% LTV?

SubstandardAndPoorers500 — Mon, 13 May 2019 19:53:53 GMT

The issue was I traded in about $4000 in negative equity from my previous loan. Car was wearing out on me and I had to find a car that could carry that amount of negative equity which no used vehicle(within my budget) would do; so boom, $30,000 car purchase. I have GAP, but eliminating that seems like a risk that could bite me should disaster strike. But the balance transfer sounds like a good idea, I'll make a decision in the coming months.

Re: Refi with 175% LTV?

Anonymous — Mon, 13 May 2019 21:43:28 GMT

Us dealers are notorious for screwing buyers so on your next vehicle purchase here's a few tips:

When you go to trade in your vehicle, demand they give you at least clean trade for your vehicle. Dealers will offer you $1,000 behind rough trade to try and steal the car and it's just unfair because consumers don't know better.

Dealers can make money in so many different ways. Most franchise stores have a pack of at least $1,500 and a doc fee (a Hendrick store nearby has a doc of $699) and that right off the bat is gross profit in their pocket. They has get a significant amount of money (dealer cash) for throwing you into the lease and that can be used to cover up your negative equity as well, bonus cash for hitting a certain number, rate participation, etc. Take for example I just leased a 2019 Acura TLX. Luckily I have a friend that's a sales manager at the store and knew there was roughly TEN GRAND in dealer cash available for putting me into the lease there. You're **bleep** right I used that to cover up the negative equity. Don't be afraid to push boundaries. I always leave about $1,000 of gross for the dealer (cause people have to make money too) and strip them down as much as possible from there. Come down to the Kansas City area and I'll help you out - I have tons of connections with dealers. :-)