How do I Refinance my high rate?

StriderM99 · ‎02-17-2013

I bought my truck a few years ago for about $18,000. It was basically my first loan on my own (no cosigner), and I ended up with a 14.72% interest rate. I had mediocre credit at the time. Currently, I owe about $9,000.

Now, a couple of years later, I have really paid attention to cleaning up my credit, and have maintained decent scores above 700. Last April, I applied for an auto loan with my wife (who had even higher scores in the mid 730s), and we recieved a rate of 2.7% for her (new) car. In October we obtained our first mortgage together with an interest rate at 3.375%. I have also (over the past year and a half) went from basically no lines of credit to nearly $30,000 available, with a utilization ratio constantly well below 10%.I mention this only to show that I have a well balanced credit report, with all sorts of different types of credit reporting (whereas, when I got my first auto loan, I did not).

With my truck originally being a used auto loan, is there any way possible I can get a rate reduction anywhere close to our other car loan?

I called the credit union my truck is financed through, about a year ago, and just as the lady was about to help me, she noticed it was a used car loan, and told me it couldn't be refinanced for a lower rate... She said something on the lines of "the credit union has one rate it offers per year, and my current (14.72) was lower than what was even available"

So with that, I just said nevermind, and never got around to looking into it again.

Auto loans are something I really know nothing about. Should I try the credit union again? Are there better options out there? I feel like I'm paying at a much higher interest rate than neccessary.

203bravo · ‎02-17-2013

as long as the truck meets age and mileage guidelines of the bank you should have no problems getting a lower rate --- probably not as good as the new car but lower than 4% should be doable.

Keep calling banks until you find a rate you like.

sccredit · ‎02-18-2013

What are the specifics on the truck? Year, Make, Mileage?

I find it hard to imagine that the best rate they offer is 14%. DCU offers used vehicle rates as low as 1.9%

StriderM99 · ‎02-18-2013

@sccredit wrote:
What are the specifics on the truck? Year, Make, Mileage?

I find it hard to imagine that the best rate they offer is 14%. DCU offers used vehicle rates as low as 1.9%

2004 F150 with 108k miles.

Kelly Blue Book values it basically right around what I owe on it ($9000). For an 8 year old truck with over 100,000 miles on it, it's in very good shape and runs like new (just inspected last week). Back in December, I managed to get a Ford dealer to offer me more than what it was even worth so they could sell me on a new truck. I passed, but felt good knowing it was definately at least worth what I owed on it.

It's financed through Citadel. I actually stopped in one day last year to update some info, and while I was there, I asked if it was possible to lower my rate on my loan.. The lady helping me said sure.. and we began... then, after asking some basic info, she stopped and said it was a used car loan, and it wasn't possible. I could have refinanced, but the current rate they offered on their used car loans was actually higher than what I was currently set at. I didn't really know anything about how credit works with auto loans, so I just took her word for it, and left. I'm assumming they'd have to pull my credit before they gave me a rate, correct? I really have no idea why she didn't. I just assummed they offered everyone one rate, regardless of credit.

As I'm recalling all of this, I'm realizing it doesn't make much sense, so I think I'll give them a call and see what someone else there has to say. If they can't do anything for me, I guess I'll start to shop around.

Revelate · ‎02-18-2013

The only issue you may be running into is the age of the vehicle; a non-trivial number of lenders have age-cutoffs on their used car loans. I think there are several that will refinance pretty much anything that still has value in the car, but it's just something to be aware of.

StriderM99 · ‎02-19-2013

@Revelate wrote:
The only issue you may be running into is the age of the vehicle; a non-trivial number of lenders have age-cutoffs on their used car loans. I think there are several that will refinance pretty much anything that still has value in the car, but it's just something to be aware of.

I was actually told the same thing a while back by a friend who worked in a finance department at a used car dealership.... She said they also have a general rule of thumb when purchasing cars over 100,000 miles. Their values drop a good bit because most dealerships will not put a warrantee on a vehicle once it has surpased the 100,000 mile mark.