Should I refinance?

CoreyGSHS · ‎08-21-2014

Hi all!

My parents gave me a new 2012 vehicle two years ago. We ended up going out the door with 72 months, 5.09% APR, $14,484 financed. My parents pay $235 a month and have not missed a payment. I will be responsible for making the payments here in the next few months.

After calculating, we still owe $11,194 (four years) on the vehicle.

I have three months of excellent credit history (been using my first credit card and staying below 10% utilization) with a Credit Karma score of 720.

I was wondering if you think it would be a great idea to refinance and see if I could get a lower auto loan APR by a credit union? I'd like to have an auto loan on my credit report seeing that I plan on financing a new $25k vehicle after I pay mine off and shoot for a low APR.

*My parents are willing to co-sign for me on the refinancing as well.

CoreyGSHS · ‎08-22-2014

Any advice? :/

Skye12329 · ‎08-22-2014

Might want to try the Auto Forums, might have better luck there.

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TrueGeminiNC · ‎08-22-2014

@CoreyGSHS wrote:
Hi all! My parents gave me a new 2012 vehicle two years ago. We ended up going out the door with 72 months, 5.09% APR, $14,484 financed. My parents pay $235 a month and have not missed a payment. I will be responsible for making the payments here in the next few months.

After calculating, we still owe $11,194 (four years) on the vehicle.

I have three months of excellent credit history (been using my first credit card and staying below 10% utilization) with a Credit Karma score of 720.

I was wondering if you think it would be a great idea to refinance and see if I could get a lower auto loan APR by a credit union? I'd like to have an auto loan on my credit report seeing that I plan on financing a new $25k vehicle after I pay mine off and shoot for a low APR.

*My parents are willing to cosign for me on the refinancing as well.

I would suggest refinancing, particullarly if your parents are willing to co-sign. Not sure what state you are in, but here in IL, there are several banks that are offering some really low auto re-finance rates.

subwaysandwich · ‎08-22-2014

What does refinancing mean in the simplest term and why do you choose to refinance..? thanks

destine2grow · ‎08-22-2014

I would see if we could get a Mod to move this thread to the auto forum so you can get more exposure!

pizzadude · ‎08-22-2014

@CoreyGSHS wrote:
Hi all!

My parents gave me a new 2012 vehicle two years ago. We ended up going out the door with 72 months, 5.09% APR, $14,484 financed. My parents pay $235 a month and have not missed a payment. I will be responsible for making the payments here in the next few months.

After calculating, we still owe $11,194 (four years) on the vehicle.

I have three months of excellent credit history (been using my first credit card and staying below 10% utilization) with a Credit Karma score of 720.

I was wondering if you think it would be a great idea to refinance and see if I could get a lower auto loan APR by a credit union? I'd like to have an auto loan on my credit report seeing that I plan on financing a new $25k vehicle after I pay mine off and shoot for a low APR.

*My parents are willing to co-sign for me on the refinancing as well.

5% isn't a terrible rate but you could certainly try to beat it. Is your income sufficient to support the payments on your own, after factoring in your other obligations?

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX

longtimelurker · ‎08-22-2014

@subwaysandwich wrote:
What does refinancing mean in the simplest term and why do you choose to refinance..? thanks

Refinancing is really getting a new loan to replace the old one, often but not always from a different lender.

Big business in mortgages: So let's say I got a $300K 30-year fix rate mortgage several years ago, when rates were high, at 7%, and I still owe $260K. Looking around, I can get another 30 year fixed rate mortgage at say 4% (or a 15 year one for less if I want to pay off quicker). So I apply for $260K mortgage and if I get it, that money is used to pay off the existing mortgage (as compared to paying the seller which would happen when buying the house), and now my monthly payments are less (because of the lower rate and because I borrowed less). In theory, I pay for 30 more years, whereas before I might have had only 23 years left, but I can always pay more (now that the required payments are less) and finish early.

Same for autos or any other loan, mortgages just tend to be bigger!

CoreyGSHS · ‎08-22-2014

Thank you guys so much for the responses! So we have decided to refinance to see if anyone could beat that APR my mother got in 2012. (She went straight to the dealership and financed through one of their branches there. I, now as a MyFICO addict, told her that was a big no-no that she should have checked with credit unions first).

So what credit unions should we check into? One locally? Or one online? What usually happens whenever two people decide to be on a refinanced loan?

CreditDunce · ‎08-22-2014

@CoreyGSHS wrote:
Thank you guys so much for the responses! So we have decided to refinance to see if anyone could beat that APR my mother got in 2012. (She went straight to the dealership and financed through one of their branches there. I, now as a MyFICO addict, told her that was a big no-no that she should have checked with credit unions first).

So what credit unions should we check into? One locally? Or one online? What usually happens whenever two people decide to be on a refinanced loan?

I would call it a big no-no to finance through the dealer... just make sure you do your research first.

If you have a relationship or wish to grow a relationship with a local credit union, I would start there. It may be old fashioned, but I think it is easiest to be able to sit down and talk with the loan officer for something like this.

There are many great credit unions you can use online, too. However, I do not know what the different CU's are looking for as far as income and credit score.

It might be helpful if you new your and your mother's credit score before shopping for a car loan. Also note, it generally takes 6 months with a credit line before you will have a credit score.