Ok, here's the deal... I have had my car for 13 months. I have a 60 month loan and my current APR is 7.5 % I can refinance at 6.0% but only for 60 months.

So, I owe 26,533 on the car

My current payment is $654 X 47 more months = 30,738 at 7.5%

My refinance option is $513 X 60 more months = 30,790 at 6.0%

So my question is, what if I do the refinance for 60 months and then pay an extra $130/month towards the principal? Will I save money and how much ealier than 5 years could I actually pay off the car?

I couldn't find any calculaters for added principal.

Thanks for the help.

-Ash

 

Simple economics: The best thing you could have done is bought the car in cash...but u didn't! Why do Americans always spend more than they can afford? If you can't afford something, don't buy it. I heard that something like 90% of Americans have some sort of debt. That's crazy!

P.S. I hope I don't offend anybody by saying this. If I do, sorry...but it's true.

 

And pay taxes again. I personally would just keep paying it the way you have been. If it was from like 12%+ then down to 6.0% then its worth it, but not for just 1.5%.

 

1.5% is not much of a difference. I wouldn't go through the hassle. You also are dragging out the loan, & that's bad because the resale of the car will be lower if you try to sell, or trade at the end of 60 months. A better way would be to just keep your current loan, & add $100, or even $50 a month. Unless you double your payments, your looking at a 3-4 year pay off either way. And you will be paying alot more for the car then what's it's worth. Another option would be to sell it, pay off the loan. Wait a few months till it hits your credit then get another car. You credit will shoot up, & it will be easy to get a low rate.

 

First of all, I can afford the car but how many 22 year old have a 30K car, a 30K truck, and a 450K house??? I was just trying to think of a way to refinance and take advantage of the lower interest rates; hopefully paying off the car early in the mean time.

I didn't really ask for criticism. I put up two scenarios and all I get is some thoughtless crap in response.

Second, you do not pay taxes when you refinance a car. It is called sales tax and it occurs when you purchase the car, not when you refinance. The refinancing option has absolutely no fees.

-Ash

 

BTW, my FICO score is 748 so I'm not worried about credit.

-Ash

 

JasonT, If I refinance, I am saving money on a monthly payment. $130 So, my question is, If I pay $130 extra just on the premium, I will pay off the car before 5 years is up. How early? I don't know, that's what I am asking advice on.

-Ash

 

Ash,
Here is what I did. Bought a house for 189K, a year later it valued at 350K. So I took out an equity loan and paid ALL MY BILL, CARS (got CLEAR titles) and my $51,000.00 custom made Anthony/Sylvan pool and now I am debt free ! AND, AND I am saving over $600.00 per month by consoldating these debts ! I'm in FABOLOUS Northern Calfornia too, I'm just not 22 years old.........

Thought I'd share this with you ! Now, it's almost time for car shopping............:P :P :P :P

 

Ash..

Here's everything you need to know.

If you refinance, and pay the extra $130/month you will pay off the 60 mos loan 13 months early (47 mos.)... Ironically that's EXACTLY how long it will take to pay off your current loan.


These calculations are accurate... trust me

With refinancing your final payment if month 47 will be $215.35, this is the ONLY savings you would realize.... about $427, all in the final month's payment.

so basically, YOU BREAK EVEN EITHER WAY. Keep it the way it is, not worth the hassle to save ~$400 47 months from now.

DOM

 

I just noticed that the 2 payments you listed are $140 difference, not $130.

If you were willing to pay an additional $140/month, your total savings would just over $850, by refinancing.....

DOM

 

Thanks Dom, that was the answer I was looking for!

Fab, not a bad idea but I like keeping the equity in the house just in case of any emergencies.

Also, if I rolled my car into the refi of the house, I would be paying for my car for the next 30 years.

We have a 15 year length on a 25K loan on the pool. Besides the house, pool, and my car- we have no other debt. I want to first pay off my car, then go for the pool. I am already making extra payments on the house.

Thanks,

-Ash

 

 

Yea you can do it this way and make sure you tell them that this extra amount needs to go to the principal so it won't go to the interest.

 

You asked our opinion and you got it. You don't have to be a ass and reply like you are doing now. We were all nice and gave you our advice. I have had since 1990 12 cars, all new. I refinanced 2 of them, and YES you do pay a fee to refinance. They have to refigure the TAX in the loan and you pay EXTRA tax after refinancing. I am not a finance person so I can't explain this well.

 

No offense taken, but it may not be financially feasible to pay for a car in cash. Each individual is different and you have to run the numbers with your financial person/accountant but...

the money that you keep in the bank and invest can potentially make you more money than the interest you pay on the loan. The break even length of time is usually about 3 or 4 years (ie: 5 years is too long of a loan period). It all depends on the cost of the loan and the quality of your investing. Say you get a loan for <6% (I know I just did) and your investments are making a paltry 7%. By keeping your money in the market instead of the car you can make 1% with that money that you would have given to the dealer. Plus you're depreciating that beast on your yearly taxes (I hope).

Talk to your money manager. It doesn't always make sense for everyone to pay cash for a vehicle. Debt is not necessarily financially unsound.

Of course if your point was that you should not buy a car that you can only afford based on the monthly payment and not the total loan, you are correct. One should not negatively overextend their debt.

I know that everyone has different financial issues and priorities and that no 'formula' is universal. I just wanted to offer the point that it may not make sense to pay cash for your vehicle.

Oh, and with respect to the original point of the thread - look for financial calculators on eLoan or Lending Tree. Keep in mind that if you shop based on a monthly payment you will probably pay more in interest in the end (your loan will cost more). When evaluating a loan one should concentrate on the total numbers paid out as principle and interest, not necessarily the monthly payments.

 

In response to the original question...

If you do nothing and keep your current loan at 7.5% you will pay a total of $4170 in interest over the next 47 months.

If you refi your car at 6.0% for 60 months, the total interest you would pay over 60 months would be $4244.

If you refi your car at 6.0% for 60 months and pay an extra $140/mo toward the principal you would end up paying off your car in 46 months and the total interest you would pay over 46 months would be $3201.

Bottom line is this... if you refi and continue to pay $650/mo, you will save about $1000 in interest.

Travis

 

Thanks! You explained it better than anyone could. You do pay more interest if you only pay the amount that is financed after being refinanced. But if you pay more, its less.

 

I figured it out exactly... it was like $855 of total savings...

I used a Payment calc. at work, so I KNOW it's accurate....

These numbers are pretty close to what you figured.

DOM

 

Dom,

Do you know where I can find a payment calc like the one you used to figure this out? Is there on on the internet?

I am looking into refinancing my home and making extra payments on a higher mortgage. This stuff is hard to figure out.

Thanks,

-Ash

 

me, except i don't talk about it.

 

22 year olds that can afford a 450k house and 60k worth of vehicles?? ok, thats about 500 per car payment on average, and at least 2000 a month mortgage...so thats 3000 in loan payments per month, plus bills, utilities, taxes, gas, insurance, etc...now thats at least anothr 1000...then obviously some savings, etc as well as money for personal enjoyment...so at LEAST another 1500...so now we are up to at least 5500 in cash, after taxes per month toward this lifestyle....before taxes thats got to be at least 7700 per month, so we are looking at 90,000-100,000 salary...i dont mean to start anything but i have a real hard time beleiving any 22 year old could have even remotely enough skill or experence in any field of work to qualify for a 100,000 salary...what could a 22 year old possibly contribute to a company or society thats worth that much??? at 22 most people are just getting a bachelors degree in something...it just sounds like a really fishy story. either that or mommy and daddy bought everything.

 

And your being liberal.

$450K house with 20% down (that's $90K cash) gives a loan of $360K. Take it at 7.5% (an excellent rate for a jumbo loan) fixed for 30 years and it calculates out to $2517.17 per month...and this doesn't include property/school taxes or insurance which will push that number closer to $3000/month just for the house. Put less then 20% down and your paying PMI at $200-300 per month.

(I just went through this all myself last August, so it's still fresh in my mind)

Your calculations were also before taxes. If he's earning that much money he'll be in a higher tax bracket and therefore have to earn more to keep more.

I agree with your analysis - with that much cash on hand we're talking .com ownership, a windfall in investments a couple years ago, or some other rarity - not a standard post graduate job.

More power to fbazakos - I wish I had that much cash when I was 22.

 

agreed, it just sounds really fishy...come on, a 22 year old with MAYBE a bachelors degree JUST out of school making 100,000 plus??? i dont think thats logical at all unless these kids are movie stars or something

 

not to mention the fact that....if someone is making THAT MUCH money, why would he still owe 25,000 on a car hes had for a year?? doesnt make much sense...anyone making that much money should be WAY above an acura as far as cars are concerned...

 

Ash, in case you haven't found a good online calculator yet, here's one......

http://www.texanscu.com/Calculators.htm

This one's relatively simple and can accomodate additional principal as well as produce an amortization schedule.

 

Sorry Jimcol:

Your quote: doesnt make much sense...anyone making that much money should be WAY above an acura as far as cars are concerned...




but if you think FANCY or EXPENSIVE cars indicate that your "BETTER" in society, you have it wrong sir ! Real wrong........LMFAO...........................LOL.. .............................

 

money.cnn.com has a shitpot of calculators...

 

Ash...

Try http://www.bankrate.com

It has the calculator and an ammoritization schedule with a lot of extra payment options to see how much you save and how much you pay off.

Just got to calculators then the Auto Loan one. good Luck

 

well, there are several people on here that know me personally, and know that I don't talk about this much, but that I have no reason to bullshit, and i really don't care. i work as a network engineer for the largest wireless company in the country. i work my ass off, and they reward me for it. that's it ...

 

There is no re taxing in a refinancing of the car. There is a processing fee plus a transfer fee to transfer the title and registration. Second of all not a lot of people have 30K sitting in there savings or checking.

 

I'm kind of in the same boat... I thought about refinancing, but after running the numbers it's just not worth it. Rather, I'm paying more each month to get the car paid off earlier...

As for the whole salary thing... Some people make more money than others, REGARDLESS of age, degree, etc. I personally don't know a 22 yr. old that makes 100K a year, but there are plenty of people out there who do make that kind of cash. I don't, so to supplement my spending frenzy, I got married to a working woman.

 

I know several people under 24 that make ~$80k a year... it's not nearly as uncommon as you guys make it sound....

Also, Not sure where you are getting the Mortg. rate info, but even 30 yr Jumbos are in the low to mid 6% range right now....

BTW, Fotis also Manwhores on the weekends so, don't forget that supplemental income... :P