Should I refinance my car?

Anonymous · ‎06-21-2017

The interest rate is a ridiculous 21.92% with Region Acceptance, but I don't know what the repercussions are with scores. Is refinancing good or bad? Should I wait until my scores are higher to secure a better rate or go for it now? I'm really not looking for any inquiries right now, but I'd really like to see that rate change drastically.

I shockingly got a pre-qualification (whatever that means) letter in the mail from GM Financial, so I must be doing something right. Right?

Anonymous · ‎06-21-2017

What is your loan balance versus the car's NADA book value? It might be hard to refinance if the LTV is over 120% -- and with high interest loans, it's usually common for refis to fail because the LTV exceeds 120%.

Do you have cash to put down to pay down your balance to get to an 80% LTV? If so, you'll get offered the best refi rate for sure.

Anonymous · ‎06-21-2017

Thanks for the info. I guess the question should have been can I refinance my car. The outstanding balance is just over $6,000 and the NADA rough trade-in value is $2,825 for my 2007 Dodge Nitro, easily putting the LTV over 200% and, unfortunately, well out of reach for a refi. Looking at the numbers (and my bank account), I'm not sure if it's feasible to put down the cash to bring the LTV down to 80%. I'll just bite bullet and press myself to pay it off over the next year. Thanks for the help.

Anonymous · ‎06-21-2017

Good idea to pay it off asap.

Each extra payment that you make to principal will reduce the interest you still owe them on the back end, especially considering the rate you're dealing with. This will help you to mitigate a little bit and keep a little money you would have given them in interest, not to mention getting out of the loan altogether faster than you are scheduled to do.

Anonymous · ‎06-22-2017

If the interest accrued daily, you may want to throw small payments at it constantly as you can and not wait for the due date itself. Some loans allow this and paying $10 a day app months reduces interest versus paying $300 on the due date.

YMMV of course.

Anonymous · ‎06-22-2017

I would relook at the book values for your vehicle OP, Pay attention to NADA clean trade in and clean retail value and let us know what they are. Bank's do not base LTV off of rough trade in (regardless of the actual condition) they will base it off clean trade in value or retail value depending on the bank. With a rough trade value of ~2800 I would venture to guess clean trade is around the 4500 and that clean retail will be around 5500-6500. Which should theoretically put you in a position that you might be able to refinance through a credit union.

pipeguy · ‎06-22-2017

If I were you I'd try to pre-qualify through DCU - if they say no, so be it since it'll cost you nothing but a CRA pull. You have to do something to get OUT of that APR. Even a credit card balance transfer (sometimes promotional 0% for 12-18 months) is better than that APR.

You won't have to join DCU if they turn you down, but it costs next to nothing to join and a no today might be a yes in 6 months.

Anonymous · ‎06-23-2017

Thanks, I'd never heard of DCU before this week. I'll definitely give them a look. As for balance transfers, with my low scores, I don't have any cards that even offer it. Maybe, if my scores grow a bit, I'll have the guts to spend an inquiry applying for one.