Should I refinance?

Miscellamy · ‎06-10-2014

I'm 8 months into a 48-month refinance loan with NFCU @ 2.99%. Balance is approximately $14k. Car is worth an estimated 16K, so I'm in good shape with LTV.

Current scores are between 710 and 750 (Barclay's EX FICO has me at 735, FACOs are PLUS 713 across-the-board, Credit Sesame at 718, CK at 759). One 90-day late four and a half years ago, three 30-day lates (most recent May 2013 (ouch!)), no other baddies. Util. around 15%.

If I refi'd, I would do a 36-month loan. For the purposes of this question, I'm going to assume that I can get approved for a DCU refi loan at the best interest rate (1.74%, since I wouldn't have Relationship benefits). Please chime in if you think this is not a good assumption. I can easily absorb the payment hike (about another $40/month). By my math, the lower rate would save me about $500 over the remaining life of the loan -- not a huge amount, but not insignificant.

But is it worth it? Are there negatives to refinancing a refinance loan? I want to preserve my good relationship with NFCU (who will still hold my primary accounts, plus a cashRewards card and NavCheck account). Ultimately, I'm trying to balance my goals of paying down debt as quickly and cheaply as possible while also strengthening my credit profile.

Creditaddict · ‎06-10-2014

isn't it still 1.24% with direct deposit... that would be worth it.

Miscellamy · ‎06-10-2014

@Creditaddict wrote:
isn't it still 1.24% with direct deposit... that would be worth it.

It is, but I don't think I want to move my direct deposit -- it's currently with NFCU and they've been VERY generous with me.

Anyone know if you can split up your direct deposit and still earn the Relationship discount with DCU? Because I'd be more than happy to direct deposit a portion of my check.

DrJim · ‎06-10-2014

Instead of refinancing I am just paying extra on my loan. I have paid $3K in the last 3 months and only have $1,200 of a $17,000 loan left. This certainly reduces the interest payout and keeps me from having to take a hit on AAoA and a new loan ding.

Will probably pay it off in a month or two, years before the loan is due to be paid. Another (and easier) way to do a refi.

Starting Score: TU 672 EQ 654 10/20/09
Current Score: TU 775 EQ 783 EX 799 (PLUS)
AMEX Delta Platinum $35K, NFCU Visa Signature $30K, HHonors Reserve Visa $35K, WF $13.5K, IHG Rewards Club MC $25K

Miscellamy · ‎06-10-2014

@DrJim wrote:
Instead of refinancing I am just paying extra on my loan. I have paid $3K in the last 3 months and only have $1,200 of a $17,000 loan left. This certainly reduces the interest payout and keeps me from having to take a hit on AAoA and a new loan ding.

Will probably pay it off in a month or two, years before the loan is due to be paid. Another (and easier) way to do a refi.

Yep, that's definitely a good strategy -- just doesn't make the most financial sense in my case. I throw my extra payments toward the student loans that aren't eligible for PSLF, and also try to put some aside every month toward a down payment. The student loans are a slightly higher interest rate than even the existing car loan.

(Speaking of which . . . is it sad that I fantasize about the day when the bulk of my student loans are forgiven? Like, a lot. I'm halfway there and just praying that Congress doesn't do away with PSLF before I qualify. But that's a story for another board).

Remember0 · ‎06-11-2014

I vote worth it.

And yes -- splitting up your DD will allow you to still qualify for the 1.24% with DCU. But for God's sake don't mention you've split it up. They have no way of telling unless you go ahead, call them, and let them know.