BzeTSX

Ok guys i bought my tsx 8 months ago, but just getting out of college i have bad credit so i got a high rate of 13%. So I was told that if i made a few payments that my credit would be improved and i could reapply and get a low rate. So, I spoke to a coworker and he said that it would be unlikely to get a refi with a used car now, because the value of the car decresed with and the loan wouldnt be profitable. What should i do, and what is a good company to refi with in Florida? Im now with wells fargo.

Dan Martin

13%!!!

Why did you ever agree to that in the first place?

taz98spin

dang..!! 13% is even higher than what my credit cards charge..!!

BzeTSX

Yes i know its high, it was the best i could do because my credit was so bad and wanted the car. No need to tell me its ridiculous, i know already.

BzeTSX

i get the point guys...

jlukja

With your credit rating, what's the best interest rate you can get now? Try your local bank or credit union. Yes, the car is used, but maybe you credit score incrreased and you can qualify for a lower rate.

You might also ask your question in our Money & Investing Subforum.

CarbonGray Earl

first off, YES, refinance. Try capitaloneautofinance.com.

Secondly, dude, you have a college education and you got a 13% loan?!? I not quite sure you 'get it'. you obviously could afford it, so you should have waited around until you could get the best deal.

Acurasrule

Hsbc

hunterk1

Can you join a non-profit credit union or something of that sort in your area that might give you a better rate? I'm really sorry to hear you're paying 13% - that's higher than my credit card - I hope you can find something better.

financeman1

Easy guys, 13% is not as bad as it sounds. A few points on $20,000 car is nothing compared to 1 point on a $250,000 house. Also, you will never get the best rate on a used car and the longer you finance the higher the rate ( more risk over time + collateral decreasing in value) However, the name of the game is to get the lowest rate possible so lets try to offer some advice. Quickly open an account with your local credit union, preferably the credit union from the university you graduated- large schools all have their own credit union. If you graduated from a small school with no CU, look at joining one of your other local CUs. Start a savings acct and try to put at least $500. Also, if possible, you would like to get at least 5% of your paycheck or 5% of your checking acct deposited weekly/ biweekly into the savings acct. This will prove you are trying to build an acct/ relationship with the CU. Your deposits will not affect their decision to make you a loan, but it will increase your savings acct with the CU. Try to wait a minimum of 6 months after your acct is opened to refinance your car. By then you will have almost a year history of perfect auto credit. Then refinance at a lower rate- but dont expect it to get below 5%, prob be in the 6-7% range. Good luck- good credit is difficult to build, but easy to destroy.

nj2pa2nc

did you try wells fargo and see if they will refinance or go online with lending tree. com. I have excellant credit but my credit card interest rate is alot higher than 13%. Yes it is high but it could have been alot higher. While you are researching are you able to pay more than what the payment is. That would help. Good luck.

SoCaliTrojan

13% of $30k is alot...refinance if possible. And if you can get a lower monthly payment while you're at it, then that's another good reason to refinance.

bz268

I will not refinance. If you do, you will start the loan all over and will waste the first 8 months and pay extra for the additional 8 months!!!! will waste a total of 2x8 = 16 months!!!! Because the first 8 months is mostly interest... very little principle. It is like flushing the cash to the toilet.

If you refinance, it is not a "new" car rate. It will be a "used" car rate. maybe much higher than 13%.

I will try to pay off early in this situation to minimize the interest.

pay... maybe $50-$100 more a month to the principle. MAKE SURE YOU INSTRUCT THEM TO PUT THE EXTRA TOWARD THE PRINCIPLE!!!! They get smart nowaday. If you mail extra, they will deduct the extra from the next month payment. So, you will end up paying the same interest!!!

Jrezo

You have have 8 months of on time payments. For sure your credit is gotten alot better as long as you have on time payments with all of your accounts. A closed in loan with on time payments helps your credit alot better then just credit cards.

NO HSBC, I used to work there the Auto loans suck

Credit Union- You can open a new account usually for free with just opening with a balance with $50 bucks. I checked my credit union today 6.5% 72 mo and 5.9% 48month.


Good luck

ZAXDude

I would tend to disagree with this. If you can refinance with a lower rate and a term that's at or near the number of payments remaining on your loan, it makes perfect sense to refinance. The only kicker is to if at all possible continue to pay the same amount of money per month as you did on the original loan if you had to extend your refinance loan by a few months more.

If OP has a 60 month car loan and has paid 8 months, he 52 months remaining. If he is paying 13% interest and and reduce that to 10% for 60 months while continuing to pay his original payment, he will save money.

Depending on your credit score OP, you might be able to refinance. I would suggest you spend a few bucks and go to MyFICO.com and obtain your credit report & score. Or, go to annualcreditreport.com and get your equifax free credit report for this year and pay for the credit score to be added. That should give you decent idea of where you stand credit-wise. Go visit creditboards.com too; there's a forum for auto financing and you can ask questions there about your chances for obtaining a lower rate.

PenFed.org has GREAT auto rates. Currently you can get a new car loan up to 72 months for 5.79%. You can also refinance if the car is a year old or less and bought new. They will also finance up to 100% of the NADA retail value. I had a car loan through them at one time, but I don't any longer. They are awesome.

financeman1

The option to pay off early is not a completely bad idea. However if the loan is simple interest, your interest is calculated on your current principle balance. The idea of that much interest being saved at the beginning is quite accurate for precomputed interest loans ( which WF may or may not use) but for simple interest it is not acccurate. Paying $50-100 extra a month never hurts, but is difficult while trying to save $ in a savings acct. I agree with the guys here- pay on your loan for 12 months, 18 months being ideal, and try to refinance. Credit unions are easier than you think to obtain loans, particulary if you graduated from the university that your credit union is held, have an account with them, and have good income. A beacon score over 650 is ideal for a credit union- and hopefully you will have this after some perfect car payments. Open NO NEW CREDIT ACCOUNTS, pay down all credit cards, chop them up and throw them in the garbage, make sure student loans are not past due and you should be ok.

1Louder

Your main problem is going to be the value of the car versus the loan you need. Most lenders will not finance more than the car is worth, especially if your credit has issues. So a couple questions - did you put any down? What was the term?

If you financed the full amount (no down) on a 60 month term, you're going to have trouble. The car depreciates faster than you'll pay it off - you won't be able to get out of it (that is, what you owe = what it's worth) for at least 3 years, maybe 4. Also with that rate, your paying more interest than principle, which makes closing this gap even harder to do.

So if you had some down payment, you have a shot I think. If not, you may have to throw more money at it (if you owe 28K and it's worth 26K, and the bank won't stretch, you'll need another 2K to close the gap).

If you're stuck in that situation, I think the advice to make additional payments is your best way to go. If you can pay an extra $50 a month toward the principle, that's almost the same as having say a 7-9% loan (because of the interest you'll save by paying it off earlier). If you had no down I don't think paying 12-18 months is going to do it - you'll be in for a longer haul than that IMO.

If you can share the loan amount and term I'd be glad to post some #'s for you to consider.

Good luck -

wenge

Before you spend hours trying to figure out how to lower your car payments you should pull your credit report and optionally your score. You can do the report for free from annualcreditreport.com: you get one pull per agency per 12 months, so either do all three now or stagger them every 4 months, whatever. If you want your FICO score (that "Credit Advantage" score is meaningless) you'll need to pay Fair Isaac, myfico.com. You need to see what's dinging you first. Are you paying things a bit late? Habitually? Do you have a huge balance on some loans? Have you been shopping around for a lot of credit -- common with folks just out of college -- recently? Unless your score is over 720ish you're not going to get a low rate, credit union or no.

TSXFL

If your credit has improved since you bought the car, you'll almost certainly be able to improve your interest rate with a refi. In Florida, Eastern Financial is a decent credit union, and I think they only charge 1/2% more for used car loans vs new.



The numbers below are the total amount of interest you will pay on a $30,000 loan for 60 months at 13% and at 9.5% interest:

13% $10955

9.5% $7800

If you can refi down to 9.5% you'll be saving more than $3000 over the life of the loan. Your monthly payment will drop by $50 and if you use that extra $50 to pay down the principal, the loan will be paid off about 5 months early. 9.5% is still a bad rate, but if your first loan was for 13%, I think 9.5% should be a realistic goal.

Keep an eye on your credit and if it continues to improve, you can keep refinancing to a lower rate (as long as interest rates do increase too much). I was in a similar position on my last car and refied several times as my credit improved.

Pay your bills on time and pay down the principal as much as possible and things will be fine.

LaCostaRacer

This is good advice. I had a similar situation for my first car loan. It started out as a 5 year loan for 13% back in 1985. I refinanced 2 times over the life of the loan and wound up paying my Prelude off 1 year early. The trick was to keep making the same payment amount throughout the loan by making extra principal payments. It's very possible to do for you as well.

You might want to try a portal like LendingTree to find out what some competitive rates are for your situation. Never hurts to try. Good luck!

Ellakameleon

I work in a dealership and I see far worse interest rates. I see it several times a week where people sign up for rates close to 20% ! There was a guy last week with 24%. In some cases the people over the term of the loan would end up paying as much in interest as the vehicle purchased!

BzeTSX

this is what ill do, ill also try lending tree and see if i can get a better rate, Firs Ill have to try and pay off a credit card or 2 to make my score even better.

Deepfreezed

try capitalone. you can get refinance loan for about 7.45%

dnd2984

iTrader: (6)

Does your school have a credit union? Try them, they give great rates.

gftgrill

you can go talk to the bank and refinance and keep the same pay off date. I did this on my last car. interest rates dropped and I talked to may bank, they gave me 1.5% lower rate and I kept the same pay off date. The bank will give you whatever loan (time wise) that you want. they want your money.

pull your credit report/score. go to a bank and let one run your credit report, then get a copy of it. take that report with you to other banks and ask for a good faith estimate based upon the scores on the sheet. Don't let each bank run your credit report because this will hurt your score.

LuvMyTSX

OMG, that's crazy

1Louder

If you've had a lot of credit trouble or been bankrupt, this is not uncommon. At the dealership I worked at 17 years ago, they had a "program" for people in that situation where they'd sell you a $600 car for $2800 and also charge you 24% interest. You paid weekly for two years, so the payments wound up ususally being $40-50 per week. That's right - $4,000+ for a $600 car. They'd always want $400-600 cash down - so essentially the dealer was at no risk because they had the cash to cover the real cost of the car, so if the buyer defaulted after X months they still came out way ahead. As if this wasn't shamefull enough, they marketed it as a way to help folks with bad credit get back on their feet (the weekly payments recorded 104 payments as opposed to 24). We probably sold 10 cars a month that way.

LuvMyTSX

Wow, what a ripoff! I absolutely could not imagine being in such trouble with credit cards, and paying through the nose for everything because of that. Once you get into debt, it seems like trying to climb Mt. Everest to get out of it.

1Louder

You'd be amazed at the stories. I think there's a good percentage of the population who don't understand that banks and credit card companies do not, in any way, shape or form, have the interests of the customer in mind. They don't care if you load up on debt. They don't care if you can't make the payments. People think that becuase someone gives them credit that it's some kind of endorsement that it's financially OK for them - like the bank has done some kind of check or put some thought into it. I honestly think people believe that a bank would not give them credit if they couldn't handle it, when the exact opposite is true.

Deepfreezed

Another solution.

Get a credit card with 0% fund transfer. put about $5000 on it. pay little by little while paying you other loan. once the year is up, cancel the card get a new card with the same deal. little bit of work but will save you some cash.

gftgrill

that's a good idea, but that's not going to look good on his credit report. installment loans with a high balance won't effect your score like a credit card with a balance will. especially if the balance exceeds about 30% of the limit.

jerzpwr

lexington law firm


call them and start repairing your credit!

ZAXDude

DON'T CANCEL THE CARD!! Cut it up, throw it in a drawer - but DON'T CANCEL IT. It will not hurt you to keep it open (unless you use it and don't pay off the balance each month) and it will HELP you in terms of available credit vs. utilization.

ishak540m

I had no credit. The dealer came to me with 11.6%. I walked out, went to Capitol One who gave me 6.4% --> dealer came back to me with 6.3% --> knocked it down even further to 6.02% when I got the Lojack/extended warranty package for $1000.00. Granted, I put $17,000 down.