Refinancing to get out of a HORRIBLE loan?

[Hogue69]

Hey guys, here is my situation.

I was discharged from a Ch. 7 BK in August of this year, however in July when I surrendered my current vehicle I *VERY FOOLISHLY* went to JB Byrider, bought a car with horrible terms, that I am currently 8-9k upside down on. I knew what I was getting into with JB Byrider, and what I had gone through with the horrors of going through the chapter 7 BK procedures, and I STILL let myself make this terrible decision. I have no real excuses other than I was just dumb, and desparate.

Heres the situation with the current loan

2011 Honda Civic

100k Miles

Condition, surprisingly good, well taken care of, I would love to get rid of the car and get something else that would be cheaper, however I am in a situation where the only move is to pay this sucker down, and learn from my indiscretions, luckily the vehicle is in great shape, and will hopefully easily last me another 100k miles.

Car value - 5.5k

Loan amount - 13.5k

Yearly APR on the vehicle - 24.99%!!!!!

My credit at the time of purchasing the vehicle was horrific, sub 500s, I was about a month away from having my BK discharged, this was BEFORE discharge, another mistake I know.

However, here I am now, working my way back, I have increased my income from 38k a year, to 58-62k a year, credit scores are in the low 600s, and I have 5 accounts reporting. 

1) Open Sky Secured CC - 10%

2) Indigo Mastercard - 5-10%

3) Finger Hut Fresh Start Account - 2%

4) Self Lender - 25/month

5) CNAC horrible auto loan.

My question is this, with being so desparately upside down on the loan, is there a chance I could refinance for better terms? With taking a new full time job, as well as picking up a second job to help add income to get my finances in order, my worst case scenario plans are to pour as much money into paying down this loan as possible, while also building my Dave Ramsey emergency fund (3 months of living expenses) but I was hoping to be able to refinance into a loan where I could decrease my interest rate significantly so I can pay down principal as fast as possible.

I would even like to explore the possibility of a much shorter length loan, current loan is 54 months, I would like to go 36 months, and continue making numerous extra payments so I could get it paid off as fast as possible, while hopefully saving some money on this ridiculous interest.

Anyways, thanks for your help and can't wait to see the responses. Thanks!

-Steve

[Anonymous]

I just refinanced 2 of our vehicles. 1 with PenFed at 3.99% and 1 with Navy at 5%. Not sure how they view BK. I had 18 lates with Fifth Third almost 5 years ago. Maybe try PenFed.

[Brian_Earl_Spilner]

Unfortunately, even if you were able to find a place that will do a high Loan To Value ratio, you're too far upside down. The highest I've seen is 150%, which would still leave you owing about half of your loan. All you can do is wait it out and try to pay extra to bring it down close to the value. I'd start by looking at your contract and T&C to see what extra payments would do and how they're applied to your loan. Check to see if there's a penalty for early payoff.

[trusty]

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@Hogue69 wrote:

Car value - 5.5k

Loan amount - 13.5k

Yearly APR on the vehicle - 24.99%!!!!!

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Hey, don't fret. Some years ago, prior to the recession, I foolishly obtained an auto loan at 27.99 APR. So, had you beat there. lol

But, in my situation it was for a brand new car. So, I was young and foolish, and yet... happy to be driving around in my first brand new car.

Eventually, I traded the car in - also foolish - and lost another I think 4 grand, buying another new car. But, that was a better cash deal, except that the vehicle turned out to be a brand new lemon, with a faulty transmission that kept slipping. Since they wouldn't replace the vehicle (only the transmission) after leaving it with the dealer for weeks - and I didn't want to go through the hassle of the lemon law route, I managed to trade that vehicle in with another dealer, and lost another 3k right off the top, in the process. Which truthfully wasn't that bad, considering the issues with that vehicle. 

Fast forward... and, since I received quality and timely service, and a fair deal from the last dealer - I've been a loyal customer of the last dealer for the last 10 years, despite them moving locations in the city, twice.

What I've learned, is that cars are a money pit. But, driving a new one does have value. Peace of mind has a price. But, above all, quality customer service is what keeps people coming back.

I hope your situation works itself out.

[Anonymous]

Perhaps.... for a while and pay every dime you can toward it (like other posted said... look into how extra payments are applied and call bank to see if you can make an extra payment toward principle only if it's not something the auto do).

Then when you garden for a while, pay down the principal and dont obtain new debt... try to get a personal loan to pay it off at a lower interest rate. Dont get tempted to have the personal loan and a new car payment though. Pay the loan off like it's a traditional car loan.


That's just an idea for you to research... I haven't done it myself.

[Hogue69]

Thank you for all of the replies.

And I think exactly what I will do is keep chugging away, making extra payments, and throwing cash at this loan to get it paid down. As I said luckily the car is in good running condition, and shape. I was also blessed with the opportunities to add 50% to my income for the following year.

I just was not sure if there was an option to be able to refinance a loan due to a much better credit position now than I was in 6 months ago regardless of the extreme negative equity. 

I'm going to take the next 12 months to protect the credit I do have, allow myself to get more time between me and my chapter 7, save money, and throw as much extra as I can onto this car as I can until it is dealt with.

Thanks everyone!!

[Anonymous]

As other's have mentioned, the possiblity of refinancing wtihout having a substantial down payment to offset your inequity, is probably out of the question.

I would first work on saving up for your emergency fund first and foremost as it seem's like the vehicle you have is meeting your needs. Once a sufficient emergency fund is established, I would throw as much money at your current loan as possible every month. Having a savings net is very important and would be my first priority, after that tackle the auto loan as fast as possible to minimize the amount of interest paid.

Goodluck!