refinance or balance transfer

Anonymous · ‎07-25-2017

hello! I recently got into a car loan for 18k at 8.2%. I was really expecting much less since I have good credit and I applied to penfed (which boasts on having the best interests rates). The official said something about having little experience which is kinda true. At this point I am trying to figure out my best course of action to lower how much siphoning the bank is going to do to me (over 4k in interests throughout the life of the loan!) I have these options in mind:
-giving out high payments (600$) I would pay half interest (2k)
-shop for more interest rates to see if some other bank offers a better interest (tho penfed probably is my best bet)
-waiting out some time and refinancing loan (but car would be older and interest would be higher?)
-applying for a balance transfer card and transferring some of the loan debt to it.
well any other suggestions woud be apreciated thanks!

Anonymous · ‎07-26-2017

@Anonymous wrote:
hello! I recently got into a car loan for 18k at 8.2%. I was really expecting much less since I have good credit and I applied to penfed (which boasts on having the best interests rates). The official said something about having little experience which is kinda true. At this point I am trying to figure out my best course of action to lower how much siphoning the bank is going to do to me (over 4k in interests throughout the life of the loan!) I have these options in mind:
-giving out high payments (600$) I would pay half interest (2k) - always a good practice to may more than the minimum payment. With PenFed you need to contact them to ensure that any extra payment amount is applied to the balance and not to future payments

-shop for more interest rates to see if some other bank offers a better interest (tho penfed probably is my best bet) - you can do this but PenFed does really have some of the lowest auto loan rates. You say you have good credit but what are your scores? How old is your credit report and what credit do you have established so far?

-waiting out some time and refinancing loan (but car would be older and interest would be higher?) - very good option and it doesn't take long to improve your auto credit to be able to refinance. In as little as 6 months or so you can start trying to refi and may receive a much lower rate
-applying for a balance transfer card and transferring some of the loan debt to it. - definitely not a good idea. First, it would be very difficult to get a card that you transfer a significant amount and the BT fee would eat some of any potential savings. Unless you can get a card with 0% for 18-21 months with a low to no BT fee and you have the ability to pay the card off you'll find that you're just transferring debt from an installment loan to a revolving credit card where eventually you could rack up some hefty interest charges

well any other suggestions woud be apreciated thanks! - either paying the loan off early with extra payments or refinancing down the road are your best choices going ahead. Good luck

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Anonymous · ‎07-26-2017

Thanks for the suggestions! The score they used to make desicion was 746. I only have one student loan for some years and a couple of credit cards for less than a year.

Anonymous · ‎07-26-2017

@Anonymous wrote:
Thanks for the suggestions! The score they used to make desicion was 746. I only have one student loan for some years and a couple of credit cards for less than a year.

PenFed uses the Next Generation FICO score (they are about the only one to do so). That's not horrible so I'm a bit surprised at your rates I guess your length of credit history hurt you. Anyways, pay for 6 months and try to refi with some place like DCU. You won't be able to refi at a PenFed because creditors won't ever refinance their own loans. Eventually you should be able to cut the rate by half or so. Good luck and enjoy your new vehicle. What did you buy?

Anonymous · ‎07-26-2017

bought a mazda 3 2016. pretty happy with my purchase it cost me 17k, but I was planning on not going over 20k for this vehicle and I will with this interest rate.

First time I hear about DCU. will they give me a competitive rate? Can you tell me more?

Anonymous · ‎07-31-2017

I would suggest waiting to refinance, your high APR is due to you lack of a substantial credit history so your best shot is to make on time payments for 6-12 months on your car loan and manage all of your other accounts well and then you should be able to refinance it and cut that rate substantially.