Refinancing one-week old auto loan

[ando35]

I got a loan at 4.99% one week ago. The agreement was 4.99 for $26700 over 72 months.

Today someone offered me 3.65%.

If I refinance I have to pay $26900 to pay off the loan which isa $200 early pay penalty.

That would give me a savings of about $950 over 6 years.

Should I do it? Is there something I am missing?

[pipeguy]

First of all I'm surprised there is an early payoff penalty, most contracts do not include those anymore (lesson learned). Bottom line, pay $200 and save $950, seems like a win to me, but your dealer is going to be PO'd because they'll lose all the back end financing money they thought they earned (I assume the dealer will get the $200).

Don't know if you've checked with DCU, but depending what your credit scores are, they should be able to offer you $1.74% to $2.25% and if they can't now, once your scores improve refi again at the lower rate.

[ando35]

Yeah, sounds good. My only question is are there any "entry" fees on the new loan? I asked them and am waiting reply. As for the dealer, I hope they are pissed off and get a bad stomach ached over it.

[ando35]

Yeah, sounds good. My only question is are there any "entry" fees on the new loan? I asked them and am waiting reply. As for the dealer, I hope they are pissed off and get a damn headache while they are at it.

[ando35]

You mean Digital Credit Union in Mass??

[pipeguy]

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@ando35 wrote:

You mean Digital Credit Union in Mass??

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Yes DCU = Digital Credit Union in Mass (note everything is handled online)

You should never pay an "application" fee for revolving or installment loans (Real Estate aka Mortgage is different).

Edit Add:  Given your loan was issued at 4.99 and "assuming" the dealer didn't stick it to you too bad (not going there), you are not "prime" meaning the very best rates but far from sub-prime meaning 10 to 20+ percent APR. I'm not going to bother guessing what rate you might get even if you gave me your "stats", because DCU will honestly give you their rate based on your credit profile, which is not a guess. 

Lesson learned NEVER accept a prepayment clause AND never pay an application fee for revolving (credit card) or installment (car loan) applications.

[ando35]

I applied.

Might as well, it is still within 12 days so I guess it will all count as one.

And I I am going to refinance at 3.65 why not at 2.5 if they will let me.

I am at 675 eq 685 ex and 690 TU. But that is not auto whatever they call it.