Refinance vs New Car

[Anonymous]

Hello All,

 I've been looking into refinancing my car when I return from this deployment or even purchasing a newer one. Right now I have an 06 Audi A4 that JUST hit exactly 100k miles before I left and is being stored until I return.My car is/was flawless before I started having some issues with it like 2 weeks prior to me leaving, some issues I believe are the iginition coil pack and/or spark plugs, plus I will have to get it serviced, new tires and some slight suspension work as soon as I get back so i was contemplating on just getting a newer car under warranty because I usually pay $400 every 6months for the service since it is an Audi. I run into issues because I want to trade it in but, I owe 9k at 11% int and its only worth 5k trade in and  7k priavte sell according to KBB. When I return I should be down to 8k left.

I've been building my credit and currently my scores are EQ 713 TU 730 EX 738 and have a small .1 card balance that can be paid at any time. So since my scores are going up I know now I can refinance and probably qaulify for a lower int rate.. but would it be beneficial for me to refinance and still pay a possible 3k for repairs or just sell it, get a newer car with money down to pay the negative equity and  no issues, under warranty at the expense of a slighty higher monthly payment?

In my eyes either way I'm going to be paying money but, should I keep my current or sell it and move on?

Thanks In Advance

[SamsungHDTV]

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@Anonymous wrote:

Hello All,

 I've been looking into refinancing my car when I return from this deployment or even purchasing a newer one. Right now I have an 06 Audi A4 that JUST hit exactly 100k miles before I left and is being stored until I return.My car is/was flawless before I started having some issues with it like 2 weeks prior to me leaving, some issues I believe are the iginition coil pack and/or spark plugs, plus I will have to get it serviced, new tires and some slight suspension work as soon as I get back so i was contemplating on just getting a newer car under warranty because I usually pay $400 every 6months for the service since it is an Audi. I run into issues because I want to trade it in but, I owe 9k at 11% int and its only worth 5k trade in and  7k priavte sell according to KBB. When I return I should be down to 8k left.

I've been building my credit and currently my scores are EQ 713 TU 730 EX 738 and have a small .1 card balance that can be paid at any time. So since my scores are going up I know now I can refinance and probably qaulify for a lower int rate.. but would it be beneficial for me to refinance and still pay a possible 3k for repairs or just sell it, get a newer car with money down to pay the negative equity and  no issues, under warranty at the expense of a slighty higher monthly payment?

In my eyes either way I'm going to be paying money but, should I keep my current or sell it and move on?

Thanks In Advance

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My vote is that you should keep your current car.

It almost always makes more sense to keep your car until the wheels fall off. When its paid off, you get to keep your car and there are no payments just regular maintenance. At 100K miles (still relatively low miles for an '06), your car is fine and just need regular 100K mile maintenance.

However refinancing will be a different story. Assuming your car book value is $7K, your LTV is 11K/7K = 157%. Lenders usually have a max LTV of 110-120%. Your scores are fine though. Small chance a lender will make an exception with your LTV. Try local credit unions or bring down the principle.

[RussianPassion]

Since I am an Audi guy, I can tell your straight up that you should get a new car. It does not have to be new. You can get a good Certified Pre-Owned Audi that has warranty. I would never own an Audi outside of its warranty.

Since you are a memeber of armed forces, I'd suggest you check with USAA as they have THE lowest rates on cars. I am talking low 1.xx%.

[RussianPassion]

Also refinancing a car with 100k is always an issue. LTV rules are different depending on year, make and model of the car as well as milage. 100k german car over 10 years old... Not a good collateral for any bank.

[Anonymous]

Thank you for your service.  I have 210,000 miles on my 06 BMW 330i so my perspective is that if you like the car then it is best to get the work done and get another few years out of it.  Not sure about the refi, most guys that get deployed use that as a chance to build up their financial resources, when I was deployed I used that time to concentrate on paying off debt (that was many many years ago) it was great to return home with absolutely no debt and a few bucks in the bank.  If it works for you perhaps you could use that time to get this thing paid off.  My guess is its book value is about 5-7k if you are upside down combined with the year and miles so a refi may not work.  Also I am pro refi when you can lower interest and shorten the time the car is going to be financed, I am never a fan of kicking the can down the road and essentially restarting, doing this can have you making car payments and paying interest for 10 or more years which gets really expensive. 

[Anonymous]

Thanks all for your input!

Well definitely didn't have any idea about the LTV%
But I do remember USAA telling me last year somehow my car had 1k worth equity on my car.

It's a tricky thing trying to figure out how much your car is really worth since not all dealerships use the sites such as KBB some use NADA and Edmunds etc.

I asked this question originally because my car is not running properly and to get it running I will have to pay at LEAST 2k to get it back on the road. Also once I get it on the road is have to pay at least 400 bucks every 6 months for it to stay on the road for the cost of maintenance. It definitely sucks owning a European car after its warranty runs out parts are very expensive and they charge outrageous amounts for labor.

What I wanted to do when I got here was pay off my car when I get back but sadly I haven't been in the military long enough to even make enough out here to pay it off when I get back.

I don't want to add 4k to a new loan..but I would have enough to cover the negative equity but that would leave me with no money to put down on a newer one.

Ideally I want to keep my car but I can't afford thousands of dollars a year to maintain it.