If you have 2k in equity and you can get a cheaper interest rate, what happens to the equity if you take a lump sum, does that amount get tacked back on to your loan like a home mortgage? I have no idea how it works, even after googling it! 
Who offers them?
If you have equity in your vehicle, some banks allow you to refinance for the full value of your vehicle giving you the cash difference between owed and value.
Some argue cashing out equity in a vehicle is a bad idea since you are likely to owe more than the vehicle is worth for awhile after the refinance.
The lower interest rate doesn't help you mathematically if you refinance for more than you owe. It's also questionable if the lower rate will save you any money if you were to get a 60 month loan if say you only have 48 months remaining.
As far as what can be saved, or if you should pull cash out during refinancing varies from person to person and situation to situation. Consider the true cost before making a decision. If you can get a lower APR, not extend time needed to repay and afford the new payment-- it's a no-brainer.
Some argue cashing out equity in a vehicle is a bad idea since you are likely to owe more than the vehicle is worth for awhile after the refinance.
The lower interest rate doesn't help you mathematically if you refinance for more than you owe. It's also questionable if the lower rate will save you any money if you were to get a 60 month loan if say you only have 48 months remaining.
As far as what can be saved, or if you should pull cash out during refinancing varies from person to person and situation to situation. Consider the true cost before making a decision. If you can get a lower APR, not extend time needed to repay and afford the new payment-- it's a no-brainer.
wouldn't make much sense in my case because I have 47 mo remaining and plan on paying it off in the 11 mos, just saw the term and was curious, appreciate the quick reply!
From a scoring perspective I'd add to this that you may be benefiting from a low % of remaining balance to original balance on loans which gives you points depending on the %. For example, if one of the loans original balance was 30K and you owe 12K and the other was also originally 30K and you owe $140. Your outstanding balance loan balance would be 12,140 of 60K, you would be at 80% paid on loans (20% remaining). If you pay off the $140 then that acct would be PIF and no longer a part of the equation and you would increase your unpaid % to 40%. Where the pts are gained seems to one of the elusive DP but many think 8.9% maximizes your score for the presence of a loan but some points are gained along the way. Some think a few once your drop from 100% outstanding balance to > 80%, but that's part of the elusiveness of pinning this down because at what % along the way seems to be unclear. Some say they see it at 75% outstanding.
I'm not encouraging NOT to pay off the $140 on the 1 loan, but with this knowledge I've paid my auto down to 18% left (technically no payment due until 9/2021). I can relax on that but I will pay it down to $500 or so (less than 1%) and let it ride as I also have a refi'd MTG outstanding balance of 112K, refi'd last year at 127K still outstanding. Since loan balances and % are combined, my low remaining balance and % on my auto loan is likely helping my score considering my MTG alone is only 13% paid down (87% still outstanding). But combined my total outstanding loan balance is 70%. I'm comfortable where my scores are now so once my MTG is paid down to 70% I'll probably pay off my auto loan as the mix is still satisfied as stated above.
Just thought I'd add this tidbit
Yes. I will likely pay it down to under 1K then not touch it for a while. It's helping my overall outstanding loan %. Once my MTG remaining balance drops to 70% I will likely pay it off as combined loans are currently at 70% and I'm good with that. But even if I had a total of 1 loan (auto), the low remaining % would help my score and credit mix would still be satisfied. Granted my lender pushes the due date forward and the interest rate is so low and something I can absorb by it sitting around.
I'm not sure if the points I received in July were due to total installments dropping below 76% or my auto loan dropping to below 25% outstanding. There was nothing else going on and no known age factors that would account for this. Can't trust CK or V3 scores or rationale in many cases, but most of the free CMS I'm signed up with sent a "milestone" email when my auto loan was 75% paid implying it was a line of demarcation alone. Received increase in all of my F8 scores but the biggest increase was my MTG score when I hit this mark.
Try getting it below 25% then let it sit and see if you get some points.
wholly smokes, those are your current scores? I'm trying to get there, I'm at 818, 822,829- by the way what does MTG stand for?
@babbles wrote:wholly smokes, those are your current scores? I'm trying to get there, I'm at 818, 822,829- by the way what does MTG stand for?
You have great scores. Congrats!
MTG = Mortgage scores. I seem to have an odd profile, maybe not for similar situations but I reached 850 on EQ and TU and saw little to no reaction to some known pt decreasing activity. As Birdman7 continues to reply to my many anomalies...it's because of "buffers". Birdman7?
yeah, EX seems to be hard on my inquires over 1 year old!