Refinance the Car???

[Knee Deep in Water Chloe]

Have a car loan currently $16,868 @5.5% pay off date 3/2015, payment is $313.65 per month.

Could refinance at 2.99% IF I pay get the loan down to $10,500.

The car is only worth $8,500 and the bank offering 2.99% will only finance up to 125% of the car. The payment, I think she said would be $180 per month.

If we pay the $6,368, it will completely wipe out my savings. We will have NOTHING left, except for an extra $120 per month.

What should I do?

ETA: The reason it's so upside down is because we rolled another car loan into it. They technically sold the car to us for $9,000ish and rolled the other loan of $10,000ish into it.
Yes, I know, I know. I KNOW!!!

[qofcc]

Can you refinance some or most of the $6,368 with a good balance transfer offer? Citibank is offering 21 months at 0% with a 3% fee if you have good credit and the minimum payment seems to be 1.5% of the balance.

[hcj]

I would not wipe out savings to save $120/mo.

[qofcc]

I would not wipe out savings to save $120/mo.

I agree. I would do it for a revolving account if I was confident I could borrow it back if needed, but not for an installment loan.

[phil5185]

IMO the 5.5% rate is a good one, I would keep it for the full term. It doesn't matter what the car is worth, mentally separate the car from the loan - I would take a 5.5% loan with or without a car involved. (Our last car loan was 60 months @ 5.5%).

Looks like you have about $13,850 remaining on a $16,868 five yr loan? Your total interest for the 5 yrs is about $2500 - you must have pretty good credit.

The key is - what do you do with the borrowed capital - I would invest the $6368 with a goal of turning it into $10,000 by 3/2015. And then, after the loan is paid, add the $314/m to that account for 5 more yrs with a goal of $35,000.

[❤ mollymouser ❤]

I wouldn't wipe out MY savings to do that. If you have extra $$, you could always pay a bit extra on your car loan and shorten the term, I suppose.

[Knee Deep in Water Chloe]

Mar 29, 2011 12:07:58 GMT -5 phil5185 said:

IMO the 5.5% rate is a good one, I would keep it for the full term. It doesn't matter what the car is worth, mentally separate the car from the loan - I would take a 5.5% loan with or without a car involved. (Our last car loan was 60 months @ 5.5%).

Looks like you have about $13,850 remaining on a $16,868 five yr loan? Your total interest for the 5 yrs is about $2500 - you must have pretty good credit.

The key is - what do you do with the borrowed capital - I would invest the $6368 with a goal of turning it into $10,000 by 3/2015. And then, after the loan is paid, add the $314/m to that account for 5 more yrs with a goal of $35,000.

No, I have $16,868 left on a $20k-something loan.
Shoot, I'll have to look again, but they payoff date might be 3/2015.

The $6800 I have in savings is literally all the cash I have. Tying it up into anything for five years scares me a bit.

[Knee Deep in Water Chloe]

Mar 29, 2011 7:19:52 GMT -5 qofcc said:

Can you refinance some or most of the $6,368 with a good balance transfer offer? Citibank is offering 21 months at 0% with a 3% fee if you have good credit and the minimum payment seems to be 1.5% of the balance.

Hmmmm...I'm not sure about that. I throw out all of the balance transfer offers so I'm not tempted to look at them. Maybe I'll look at citi's online offers or call and ask what they'll do with my current account

[Knee Deep in Water Chloe]

Oh, and yes we have good credit. As of last week when we went to the bank for the refinance application, both my husband and I have scores of 760.
We're generally in the 750-780 range.
Our debt to income ratio, mine especially, is too high to get above 800.

[phil5185]

No, I have $16,868 left on a $20k-something loan.
Shoot, I'll have to look again, but they payoff date might be 3/2015.

Yes, the date or the amount must be different - because $314/m for 48 months is only $15,072 (less than the $16,868).

The $6800 I have in savings is literally all the cash I have. Tying it up into anything for five years scares me a bit.

Yes, agreed - I would use something that you can sell immediately if you need to.

[CCL]

Would refinancing even save much in interest? I'm guessing you would also be extending the loan to a longer term. Don't drain your savings to do this. You may need the cash at some point.

[DVM gone riding]

I would simply focus on paying extra (even 25-50) but if you could double down that would be the way to go. I would stop putting money in savings if this was the only debt I had and try to put an extra principle payment twds the car every month