It is a shame.

[leet]

It is a shame that I am 25 years old and don't really know about refinancing. I always thought refinacing a loan was to free up some cash. My bank wants me to refinance my outlander by 4 points off my current 12.6%. This will lower my payment from 391 to 310 but it will be for 36 months. When I have 24 months left. I don't need the extra cash but I want to pay this car off fast. If I refinance and keep paying $391 will I pay off the car quicker than 24 months? I tried crunching some numbers but I think it just the same and think I should decline the offer. Thoughts please. I never refianced anything. My Eclipse was never refianced even when they offered me so I am very curious to try it but don't want to get regret anything.

[pat_08GT_Spyder]

i dont know about refinancing but 12.6% is f***in high for a car loan !!!!!!
i'm at 2.8% here, and even that i think is too high these days...

if your bank offered you to refinance, chances are you'll get screwed one way or the other... check one of those loan calculators online, enter your specifics, and see for your self... and look around too, i would imagine you could find something way cheaper than 12%, or even 8%...

try this maybe: http://www.onlineloancalculator.org/

[trevroar]

Its a number game. Pay less over longer period of time, or pay more for a shorter period of time. Either way, the finance institution will make their money off you.

[pat_08GT_Spyder]

try this one:
Refinance | Savings from Refinancing Calculator by Bankrate.com

i plugged in your numbers, and throw in $10k for the current loan amount...
with that it says you'll save just about $2k by switching to a lower interest rate...

what i would do man, if you can afford the $391 a month, is switch to the new rate (8.6%) AND keep paying the same $391... you'll knock that b**ch out a lot faster !

[haladafs]

damn! 12.6%

[leet]

Originally Posted by pat_08GT_Spyder

try this one:
Refinance | Savings from Refinancing Calculator by Bankrate.com

i plugged in your numbers, and throw in $10k for the current loan amount...
with that it says you'll save just about $2k by switching to a lower interest rate...

what i would do man, if you can afford the $391 a month, is switch to the new rate (8.6%) AND keep paying the same $391... you'll knock that b**ch out a lot faster !

Opps sorry I meant 5 points off so new interest rate would be 7.74%. Fail on my part simple math =*( . But if I do that I will still be paying it off within 24 months or around there won't I? Only thing I can think of is to get a lower APR but make it a 24 month loan then it should be a quicker pay off (Do banks want to do that?). BTW 12.6% because is my 1st car under my name at age 21 I think.

[pat_08GT_Spyder]

yeah, you got it...
the exact numbers dont really matter, but the general idea is:
- get as low of an interest rate as you can
- pay as much as you can

so if you get a new rate at 7.74%, and still pay $391, i bet you you'll pay it off in less than 24 month...

i'm just thinking... you should ask your bank for a detailed breakdown of your current loan (ie. what you have left on it)
All loans / mortgages are designed so that you pay most of the interest within the first 2-3years... the breakdown will show you what portion of your $391 goes against your principal (loan) and what goes against your interests...
once you get that, ask them for the same thing on the NEW loan, and compare...

by giving you a new loan, the bank might want to start their vicious cycle again by charging you more interest within the 1st year or 2 that you would have paid with your current loan...
but overall, lower interest = better deal.

gotta go !

[Nick]

Any refinancing fees?

[leet]

Originally Posted by Nick

Any refinancing fees?

$100 that would be included in the loan so no money out of my pocket. My GF says go with the lower interest and keep paying the $390.

[Nick]

at $390 you should pay it off in about 28 months instead of 36 on a $10,000 loan. Saves about $71 in interest.

[GotRice?]

I'm a bit confused as you seem to have the answer already:

Current: $391*24=$9,384
New: $310*36 (+$100 for refi) = $11,260

Overall, it costs you $1776 more to refinance the deal. I think they're trying to make more money off you with the sweeter looking 7.74% but in the end, they net more cash. That doesn't really take into account you're monthly finances of paying $81 less for 2 years, which may be big to you but in the tail end of it you'll be paying another year. pros and cons each way.

hope that helps.

OT, 12.6%? pfft.... I had a butt-reaming 17.8% with CapOne at one point 3 cars ago. Thankfully, the one thing that was killing my credit score at the time expired and I get to enjoy the 2.99's now.

EDIT *deleted repeat sentence*

[TheFootOfGod]

if you want to pay off the car quickly refinace it and put all the extra cash towards the balance on the loan


that is how you pay shit off

you owe 10,000 + 2500 for interest. just for example of course.
when you finance a car the payments are mostly interest at first. what you need to find out is this. when you get a car loan at some point the interest is completely paid off. you pay the interest first. so at this point you need to find out if you are still paying interest or simply paying the principle. if your still paying interest. then refinance and put the extra cash towards the principle balance and you will pay it off quicker.


i hope this makes sense. its kinda jumbled

[TheFootOfGod]

Originally Posted by GotRice?

I'm a bit confused as you seem to have the answer already:

Current: $391*24=$9,384
New: $310*36 (+$100 for refi) = $11,260

Overall, it costs you $1776 more to refinance the deal. I think they're trying to make more money off you with the sweeter looking 7.74% but in the end, they net more cash. That doesn't really take into account you're monthly finances of paying $81 less for 2 years, which may be big to you but in the tail end of it you'll be paying another year. pros and cons each way.

hope that helps.

OT, 12.6%? pfft.... I had a butt-reaming 17.8% with CapOne at one point 3 cars ago. Thankfully, the one thing that was killing my credit score at the time expired and I get to enjoy the 2.99's now.

hope the above helps

yes but with the lower payment you could pay off the principle balance quicker and not end up paying all the interest. but that requires that you are making additional payments towards the principle balance on top off the monthly

[GotRice?]

Originally Posted by TheFootOfGod

yes but with the lower payment you could pay off the principle balance quicker and not end up paying all the interest. but that requires that you are making additional payments towards the principle balance on top off the monthly

true, that's if he pays it off before the 24 months. If he pays till full term, just saying he'll be paying more with the number he laid out.

[GotRice?]

Originally Posted by TheFootOfGod

if you want to pay off the car quickly refinace it and put all the extra cash towards the balance on the loan


that is how you pay shit off
...

This is true of in certain situations. For example, we have one car that we're doing that with now even though its a low interest rate. But my USED eclipse, I stretched it out for a full 5 years since I'll be paying only like $150 a month and altough it doesn't make much sense to be still paying for a 10 year car at the end of the deal, paying a low monthly balance that's negligible makes up for it.

[TheFootOfGod]

Originally Posted by GotRice?

true, that's if he pays it off before the 24 months. If he pays till full term, just saying he'll be paying more with the number he laid out.

exactly gotta pay it off early

[joeyb]

oh man, just reading this thread makes my head hurt.