Zack85
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| Car Loan Help |
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Any advise for my current situation would be greatly appreciated...
In March 2010, I took out a loan for $12,055 for a used car (2007 Ford Fusion). I needed a new vehicle being that I had just moved to a new state, started a new job, etc but my credit rating was pretty low (dumb mistakes when I was young... it was between 590-620 at the time). I make a decent amount of money (approx. $67,000 annually), so I believe that's why they gave me the loan, but at a horrible rate (18.52%).
I have done everything right to improve my credit the past two years, and it has steadily increased to about 690-730. I have paid an extra $24 dollars each car payment ($276 monthly required, I pay $300). I don't really want to continue to pay all this interest for the next four years (six year loan), but am not really sure what my options are. I tried to refinance through my bank, but I was declined. The car loan company will not refinance one of there own loans either. I still owe $9,500 on the car loan (not including interest of course), and would love to be able to lower the interest rate. The KBB on the car is about $9,200.
Any suggestions?
Thanks!
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Sun Jan 01, 2012 10:42 pm |
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oldguy
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Try a credit union, you might get a slightly better deal. A 730 score is getting closer to acceptable, they might talk to you.
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Sun Jan 01, 2012 11:46 pm |
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littleroc02us
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My question is that where is all of your money going? You make over 4k a month and can only pay a little extra each month. What does your budget look like?
Risk comes from not knowing what you're doing. (Warren Buffet)
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Mon Jan 02, 2012 5:32 am |
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KatherineLee88
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That interest rate is horrible!
Follow the above advice and try a credit union. Also, are you sure that your credit score is approaching 730? It sounds to me that you're doing a lot of credit shopping. Each time you do that you get what is called a "hard pull" on your credit report. Essentially when you do this the banking institution you asked to give you a loan looks at your entire credit report and then is listed on your report for a few years that they pulled the report. All "hard pulls" on your credit report negatively impacts your score for 6-12 months. Additionally, it reflects badly to other creditors since they then know you are really looking to get money.
Just be careful. Really think through your options and drop the $20 to pull a report with a FICO credit score again to verify your score. Talk to a credit union rep about what a score like yours could probably do before you agree to do another hard pull on your credit report.
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Mon Jan 02, 2012 2:13 pm |
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Zack85
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Thanks for the posts everyone. I am just now in a situation where I can pay about $400 a month on the loan, but again, don't want to continue to throw money down the drain on a horrible interest rate.
I am fairly sure of my FICO score... I do the truecredit three score monthly thing. My average score right now is 710 between the three.
What about selling the car to pay off the loan? I would be able to get enough to pay off the balance, then get a new car/loan with my improved credit rating, or would out be best to stick it out with my current loan, pay extra each month and try to pay off the car quicker?
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Thu Jan 26, 2012 6:06 pm |
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oldguy
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You are fixating on the interest rate but you are missing the BIG cost of owning a car, depreciation. In the year and a half that you've owned it, it has lost over $3000 in value. You are just now getting to the point where you can drive it for another 10 yrs and pay only $500/yr for depreciation. Modern cars provide trouble-free service for over 200,000 miles, I would keep it - what is the current mileage? It's not even 5 yrs old, what would you replace it with if you sold it?
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Fri Jan 27, 2012 12:09 am |
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eastmn
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Is your car note a simple interest loan? If not, then you may have "fine print" with early payoff penalties (or rule 78 loan). If it is simple interest, then I'd knock it out by paying 2 or 3 notes per month (big chunks), but you'd have to always specify that the extra be applied to principal.
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Fri Jan 27, 2012 3:43 pm |
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Offshore-Wealth.com
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Interesting,
Now doubt, the interest rate is a rip off, and I would also go to a credit union for they offer the lowest rates at this point in time, usually in the 4% to 5% range, so calculate your savings, you will be amazed. You have to open an account, so shift your banking is first step, and in a few months, apply for loan. Your FICO score is reasonable given economic recession, so since you get monthly updates, make sure there is no negative items, and if so, dispute them for accuracy.
Personally, if a credit union doesn't approve you, there are other options, and many will be far below your 18% plus deal. Selling the car and purchasing another used vehicle would be another option since it appears you won't lose much on your current vehicle. I never pays to buy new, always look for a car a few years old with higher mileage which are the best deals, just make sure you Carfax check for proper maintenance records. Keeping your current loan is crazy, as to keeping car, only if you can get refinanced.
Success to all,
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Sat Jan 28, 2012 4:17 pm |
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angelasimon
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Whether you want to buy a new or an old car, you can always choose an option of financing through different banks. Interest rates are the most important aspect of any loan as because on the basis of it equated monthly installment (EMI) will be calculated. Every bank has their own rules and norms to follow with different proceedings.
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Fri Feb 10, 2012 6:21 am |
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Darwinedward
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| hello |
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What happens to an existing car loan if I were to buy another car?
What happens to an existing car loan if I were to buy another car?
I bought a car in 2003 and owe about $8000 on it but am thinking of buying a new one. What will happen to my existing loan if I were to buy a new car? I would still owe that right? Would they just add that amount to a new loan amount? I'm confused about how this works. Please help!
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Fri Feb 24, 2012 6:20 am |
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eastmn
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| Re: hello |
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quote:
Originally posted by Darwinedward
What happens to an existing car loan if I were to buy another car?
What happens to an existing car loan if I were to buy another car?
I bought a car in 2003 and owe about $8000 on it but am thinking of buying a new one. What will happen to my existing loan if I were to buy a new car? I would still owe that right? Would they just add that amount to a new loan amount? I'm confused about how this works. Please help!
Check the trade-in and retail value of your old car here:
http://www.edmunds.com/
If you owe more than it's worth (upside-down), then you'll need to come up with the difference to get it off of your back. There ought to be protection (insurance) against ever becoming upside-down in a car loan.
Another option is to find a really good deal on the next car, to buy it for much less than it's worth (wholesale); such that the loan value of the new car would also buy you out of the old loan.
As a third option, you might consider that some finance companies will finance anything and everything; including upside-down deals. American General Finance was once that way here. American General is owned by AIG; and so they were likely insuring and re-selling the paper as derivatives; would take anything they could get their hands on (to milk fractional reserve credit lines?).
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Last edited by eastmn on Fri Feb 24, 2012 1:58 pm; edited 2 times in total |
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Fri Feb 24, 2012 12:53 pm |
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oldguy
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quote:
I bought a car in 2003 and owe about $8000 on it but am thinking of buying a new one. What will happen to my existing loan if I were to buy a new car?
Late-model cars are a status marker in the US - people buy them for show, long before there is any real need for them. Near-new cars are often the root-cause of the financial of families, they try so hard to own multiple new cars. That is why millionaires usually drive old cars.
So the question is - why would you get rid of a 2003 car? My 2001 only has 100,000 miles on it, I consider it to be about half used, I'll want a new one in 2021.
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Fri Feb 24, 2012 1:30 pm |
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Flipyourdebt.com
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I would talk to a credit union. They are known for having competitive consolidation loans.
As others have said, beware of having your credit checked too often, because it will ding your score.
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Fri Feb 24, 2012 1:31 pm |
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eastmn
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quote:
Originally posted by Flipyourdebt.com
... ding your score.
flipyourdebt,
You should add "debt settlement" to your "Tax Debt" page 
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Fri Feb 24, 2012 2:25 pm |
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asapcc
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quote:
Originally posted by Offshore-Wealth.com
Personally, if a credit union doesn't approve you, there are other options, and many will be far below your 18% plus deal.
Normally I wouldn't recommend a credit card for something like this. Obviously, securing a reasonable bank loan should be your first objective. But it that doesn't work, you may have better luck getting (or using) a credit card -- which is likely to be well below 18%. If it's not below 18%, obviously it's not even worth considering.
Do you have any credit cards now? What is your current credit limit and interest rate? Maybe you could call your existing credit card issuer and ask for a rate reduction and / or credit limit increase? With all the improvements you've made over the past 2 years, it's likely they'll oblige your requests...
Also consider that many new offers will provide 0% for a year or more. You'll need to pay a balance transfer fee, but it will definitely result in big savings. The main question is, what type of offer will you get approved for with some questionable history in the past??? Will you get a low enough interest rate and a big enough credit limit? It's hard to say, but it still might be worth considering a credit card to help improve your credit even more moving forward...
Just my 2 cents
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Fri Feb 24, 2012 4:41 pm |
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