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Hello,
I wanted to get some advice because I just have no idea what to do
I currently have a car loan w/ BB&T and I’m currently paying about $680 a month. I’m planning to buy a house in April 2021 and I want to bring that payment down or get rid of it, so that I can use that extra cash towards the monthly mortgage payments.
Now, I don’t know if I should should pay it all off (19k left), sell it and buy a new car w/ lower interest OR refinance it.
The original Loan was almost 42k @ 5.75% for 72 months. My credit wasn’t when I got the car, but is now so much better.
Here’s the loan breakdown
Car $34,472
Gap $750
Extended warranty $4181
Fees/Taxes/Title/Service $2082
The car is a 2014 Mercedes Benz GLK 350 and w/ 64k miles now. I checked what the value of the car is and it is worth anywhere from 13k-16k.
Would it make more sense to refinance it, sell it and buy a new one car at the lower interest or just pay it off?
Any advice is much appreciated.
@mbauza86 wrote:I’m planning to buy a house in April 2021.
You don't want a new loan within a year of getting a mortgage loan.
Want to bring that payment down or get rid of it, so that I can use that extra cash towards the monthly mortgage payments.
Mortgage loans are 15-30 years, cars short term. If a car payment means you are so close that you need that money for your payments you should be hard thinking buying a house at this time.
Now, I don’t know if I should should pay it all off (19k left)
If you have the money and don't need it for down on house, closing cost, etc, (Yes)
Sell it and buy a new car w/ lower interest
"No new loan".
You could sell it and buy cheap car with cash.
Refinance it.
The original Loan was almost 42k @ 5.75% for 72 months.
The car is a 2014 Mercedes Benz GLK 350 and w/ 64k miles, worth (13k-16k).
That is not really a horrible interest rate on a long term loan. You already have lost the most in depreciation and paid the largest part of your loan interest. I would think about keeping the car, if your profile supports home purchase without selling it. After closing on house refinance.
Good luck
@Kforce wrote:
@mbauza86 wrote:Refinance it.
The original Loan was almost 42k @ 5.75% for 72 months.
The car is a 2014 Mercedes Benz GLK 350 and w/ 64k miles, worth (13k-16k).
That is not really a horrible interest rate on a long term loan. You already have lost the most in depreciation and paid the largest part of your loan interest. I would think about keeping the car, if your profile supports home purchase without selling it. After closing on house refinance.
I calculated the numbers.
42k @ 5.75% for 72 months at the payment with 19k balance = $6,300 interest paid to date.
From 19k to loan end = $1,400 additional interest paid.
You are way past "the point of no return", in my opinion.