Refinancing Strategy

[Anonymous]

I'm financing a car I started paying in January (CPO 2012 VW Passat SE). It was my very first car loan and I got a 5.44% rate for 72 months. My strategy is the following:

I want to refinance my car in February 2016. Why Feb 2016? In January this year, I got a car loan and 3 new credit cards, so that's 4 inquiries. I also have a 50% utilization right now that I plan on making around 10% by February (over 8k in credit card debt, no interests on it so I'm not really worried). I also want a full year of auto payments and a full year for the inquiry impact to decrease.

By Feb 2016 I will have around $21,400 left on the loan (monthly payment x months left on the loan). Assuming it's a 2012 car, what do you think my best approach is (CU, bank, etc) and about what around what rates should I expect? I just want to have an idea. I'm assuming a FICO of about 700-710 by Feb. 2016.

Thanks!

[Anonymous]

A credit union will almost always be your best bet! My CU has rates under 2% for auto loans.

[Hoya08]

As long as interest rates hold, you should be in the 1.00% - 3.00% range for a refi.  However, the Fed is contemplating raising interest rates in Sept. 

Your loan balance will be less than monthly payment x months remaining.  As long as the loan balance in Feb '16 is close to it's Feb '16 'retail value', you should not require a down payment.  For example, as of today, the current NADA clean retail value for a 2012 VW Passat SE V6 with 45,000 miles is approx $19,650.

[ezdriver]

Age of vehicle, market value and amount of equity will determine what you refi choices will be.

I went to my credit union looking to finance a 2007 Porsche 911S4 with 16k miles on it. The rate quoted to me was 9%. If the vehicle year was 2008, the rate would be 2.3%.