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How long until refi?

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How long until refi?

My folks just bought a new car. Excellent credit but they were given a 5% rate. Their loan officer asked them to wait 90 days to refi. Can anyone enlighten me on the reasons one would want to wait to refi?
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Frequent Contributor

Re: How long until refi?

Suspicious me says, if they refi out too quickly, the dealer doesn't get their commission.

They should do it when it makes sense. Right now rates are up 2%(almost double) over about 2 years ago. If a bank they like will refi them for a rate that's worth it, do it.

Or, they could just pay it down quicker. I haven't done the math, but I expect there's a sweet spot where you pay less overall if you pay down X amount in the first year vs just refi-ing.
2017-09-09 FICO 08: EQ 677, TU 640, EX 705
2019-09-07 FICO 08: TU 783
2019-09-05 FICO 08: EX 748

Gardening again until... soon(I need to replace my car)

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Senior Contributor

Re: How long until refi?


@work_n_progress2 wrote:
My folks just bought a new car. Excellent credit but they were given a 5% rate. Their loan officer asked them to wait 90 days to refi. Can anyone enlighten me on the reasons one would want to wait to refi?

@ArdeckoIs correct, when a dealer places your loan they almost always get a kickback commission from the bank, if you refi within X amount of days the bank pulls back the commission. 5% with excellent credit is a little high, but currently 3.50-4% is about as good as you'll get unless it's a new car that the manufacturer is offering 0% or reduced APR.

 

Refinancing is easy though if your folks aren't happy. I bought a car in Sept. 2017 and came in with a pre-approved loan from a small local credit union I like. Everything went fine until I got to the finance guy who kept pushing a loan from Wells Fargo for almost the exact same terms. I told him "No, I really like my credit union and I really don't like Wells Fargo for all the crap they've pulled". And I knew he was pushing WF for a kickback. That was late Friday afternoon, Monday the finance guy calls and claims my CU didn't "get back to him fast enough" so he placed my loan with WF. (The Power of Attorney they have you sign claiming it's for them to handle title & registration also gives them power to arrange financing) I don't get mad, I get even, so I immediately applied to refi with the local credit union which they got done in a few days. It put a smile on my face thinking about the finance guy getting notice of the refi and loss of his kickback. Smiley Happy


Fico 08: 734/716/734 TU/EX/EQ
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