Planning to Refinance. Thoughts?

[Anonymous]

I got my car in 2014 from an Auto Loan with Wells Fargo Dealer Services. I got $28K at a 3.49% interest rate and length of 72 months. I have never made any late payments. Always on time. 

Currently, 

• My credit UTI is at around 15%
• FICO08 Scores in my Siggy (as of mid-June)
• Around 6 new accounts within the last 3 months.
• No baddies

The only reason i'm trying to get my loan refinanced is to lower my monthly payment. I currently pay about $440.

This is my first time refinancing. I got my car with the help from my dad who signed as my co-borrower. At that time, I couldn't do it alone because I didn't have much Credit History even though my income supported it. So the dealership asked me if I can get someone to co-sign with me.

How do you go about refinancing? Who should I talk to first? I'm trying to minimize as much HPs as I can.

Thanks in advance!

[SamsungHDTV]

Talk to credit unions first. Apply for the refinance on your own. Your dad will have to sign a document at closing - FYI.

Only concern is your LTV which usually gets bad when you have a loan for 6 years. But you might be okay.

[Anonymous]

Thanks for the response.

Can you elaborate more on what LTV is and why it might become a concern when I refinance? Thanks!

[jimmyt2003]

i wanted to refinance and my reason was i wanted a lower payment, i know there's a double edged sword when it comes to auto loans its either lower rate and high payment or low payment and high interest, my choice is usually, has always been and always will be a military friendly bank, they cant' be beaten by anyone, not regualar banks nor credit unions because they understand military needs and hardships. if you are related to or are a service member go with USAA.   

[Anonymous]

I just refinanced my auto loan today. I originally had a 20k loan through USAA at a 6.49% APR. Was paying approx 337 per monthe for 72 months. As of today I had 66 payments left.

I joined DCU at the same time I got my auto loan (was a bitch to join, but worth it in the end) and to establish a financial relationship I applied for a credit card, was approved for 6k. I got pre approval offer for a CLI to 10k and a 40k auto loan.

I applied for both offers. Got the CLI on the card to 10k and got my loan refinanced to a 1.74% APR for 65 months. Payments are now 298 a month and I pay the loam off a month earlier! Gotta love DCU!

[Anonymous]

Congratulations, great outcome.  Building a relationship with a good credit union really pays off tremendously.

[SamsungHDTV]

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@Anonymous wrote:

Thanks for the response.

Can you elaborate more on what LTV is and why it might become a concern when I refinance? Thanks!

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LTV stands for Loan to Value and its the Loan amount compared to the Value of the vehicle.

Quick example: Lets say you have $12000 loan on a Honda that is valued at $10000. You would divide 12000/10000 and that would equal 1.2 or 120%. Lower is better.

If you cannot pay your loan, the lender would only be able to recoup $10,000. Lender loses $2000. I hope that makes sense. So, therefore most lenders have a maximum LTV they are willing to take on which is around 120%, maybe higher if you have a good credit score.

In your case, when you have a long loan term, most of the payments at the beginning only go towards interest. This can sometimes lead to your loan amount being higher than what your vehicle is worth. So, figure out what the value of your vehicle is. You can look on NADA or KBB. Then do the LTV calc so you know what to expect.

[Anonymous]

Thanks for the responses, everyone!

So I did become a member at DCU and they were able to approve me to refinance my auto loan.

I saved almost $100 in monthly payments. Interest rate also drops from 3.49% to 2.24%! 

Thanks so much for the tips!