possible to lower pymnt on loan?

[Anonymous]

I have a relatively new car loan that has a low-interest rate.  Because the rate is low and because I must have an installment loan to enhance my score, I want to keep the tradeline.  However, I want to free-up some cash within my monthly budget by paying maybe 50%-75% of the car loan off using my tax refund.  Will Toyota re-calculate the loan to a lower payment, freeing up some cash or will I have to re-fi the loan to get a lower payment?

[StartingOver10]

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@Anonymous wrote:

I have a relatively new car loan that has a low-interest rate.  Because the rate is low and because I must have an installment loan to enhance my score, I want to keep the tradeline.  However, I want to free-up some cash within my monthly budget by paying maybe 50%-75% of the car loan off using my tax refund.  Will Toyota re-calculate the loan to a lower payment, freeing up some cash or will I have to re-fi the loan to get a lower payment?

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You can ask Toyota but the typical answer is "no".  What you are talking about is "recasting the loan"  and most lenders just don't want to do it. They prefer to have you refi rather than recast your existing loan. 

Maybe others here have been able to get their loan recast and hopefully, they will jump in and give you tips on convincing your lender to do so. 

[JGGM]

Toyota Motor Creit will not do that 

[Anonymous]

Please excuse me for all the questions.  What happens if I send them 50%-75% of the balance? They will apply it the principal? But my monthly amount is not changed? 

[JGGM]

If you send them a payment of 50% of the balance, it will not adjust your monthly debt obligation to them. I don't know about Toyota, but Ford Credit will just say you have a payment due of $0 for the time you have prepaid, but when you do have a payment due again it will go back to your scheduled payment. 

[Anonymous]

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@JGGM wrote:

If you send them a payment of 50% of the balance, it will not adjust your monthly debt obligation to them. I don't know about Toyota, but Ford Credit will just say you have a payment due of $0 for the time you have prepaid, but when you do have a payment due again it will go back to your scheduled payment. 

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OK thanks.  That makes sense.

[Anonymous]

One option you should consider is making that payment and then refinace the car with a good credit union, you could adjust the length of the loan to match the payment you want.  Penfed has fantastic rates and with your loan to value ratio you should be able to get approved easily assuming your scores are decent.  

[Anonymous]

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@Anonymous wrote:

One option you should consider is making that payment and then refinace the car with a good credit union, you could adjust the length of the loan to match the payment you want.  Penfed has fantastic rates and with your loan to value ratio you should be able to get approved easily assuming your scores are decent.  

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I actually thought about this.  Is it worth it when my current rate is 2.9% and credit unions usually won't go below 1.79%-1.99%?

[Anonymous]

If your goal is to lower your monthly payment then it would be worth doing, there are no fees for refinancing a car so as long as your not prolonging the term I don't see a reason to no refinace to reduce a rate and payment.  Having said that your interest is pretty low, if you have any debt that has interest that is higher I would prioritize that over paying down the car.  If you pay it to Toyota they will essentially make payments in advance so you could take a vacation from car payments all together for a period of time.  Decisions decisions

[Anonymous]

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@Anonymous wrote:

If your goal is to lower your monthly payment then it would be worth doing, there are no fees for refinancing a car so as long as your not prolonging the term I don't see a reason to no refinace to reduce a rate and payment.  Having said that your interest is pretty low, if you have any debt that has interest that is higher I would prioritize that over paying down the car.  If you pay it to Toyota they will essentially make payments in advance so you could take a vacation from car payments all together for a period of time.  Decisions decisions

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Thanks! That's some good advice.