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Is refinancing the car worth it?

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rated:
   posted: Apr. 21, 2008 @ 9:37p
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When I purchased my car a few months ago I was able to get the best interest rate by getting a 60 month loan at 7.25% The loan was for roughly $27k.

I am now down to $24.5k and I have also saved up $20k...

Whats the best option for my money?
A) Refinance the current value $24.5k @ 6.25% for 24 or 60 mo (my local credit unions buyout APR) (Use additional cash for investing/stocks (I am a beginner))
B) Refinance the current value $24.5k @ 6.25% 24 or 60 mo (my local credit unions buyout APR) (Use additional cash for emergencies/and keep in ING)
C) Put $10k down and refinance $14k @ 6.25% for 24 months (keep $ in savings for emergencies, etc)
D) Save up a few more months and pay off the loan, but have no savings left

I'm thinking option C is the best but what do you think? OR What other options do I have?

Thanks!

   posted: Apr. 21, 2008 @ 9:38p

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rated:
   posted: Apr. 21, 2008 @ 9:40p
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Penfed is offering auto loan rate at 4.25%. Why do you want to finance at 6.25%?

rated:
   posted: Apr. 21, 2008 @ 9:53p
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krz4runner said:When I purchased my car a few months ago I was able to get the best interest rate by getting a 60 month loan at 7.25% The loan was for roughly $27k.

I am now down to $24.5k and I have also saved up $20k...

Whats the best option for my money?
A) Refinance the current value $24.5k @ 6.25% for 24 or 60 mo (my local credit unions buyout APR) (Use additional cash for investing/stocks (I am a beginner))
B) Refinance the current value $24.5k @ 6.25% 24 or 60 mo (my local credit unions buyout APR) (Use additional cash for emergencies/and keep in ING)
C) Put $10k down and refinance $14k @ 6.25% for 24 months (keep $ in savings for emergencies, etc)
D) Save up a few more months and pay off the loan, but have no savings left

I'm thinking option C is the best but what do you think? OR What other options do I have?

Thanks!

You probably need to provide more information to get a good response on your specific situation.
Do you need the savings for any other purposes? Down payment for a home? Emergency fund? Etc?

Since you listed additional cash for investing as an option, it sounds like you wouldn't need it for any other purposes. You are only a couple of months into your loan, and it would be hard pressed to beat a guaranteed ~7.25% return on your money by not paying the interest on your loan, so that would make more sense to me.

If you are disciplined you could float the balance on a 0% credit card, but you risk not having future 0% offers available when the initial offer is up.

Not having additional information, I would pay off what you can and start re-building up savings by using what you would've paid monthly and putting it into a savings account.

rated:
   posted: Apr. 21, 2008 @ 10:19p
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krz4

you should be able to finance at a better rate than 6.25%. I dont know if you can beat 7.25% by investing for sure. So If I were you I would go for Penfed and then look at your options

Infact I am in a similar situation. Refinanced my car loan at 4.5%. I think I will just stick to paying monthly payments for now even though If I tried hard I could pay it off by the end of the year

rated:
   posted: Apr. 21, 2008 @ 10:30p
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My current interest rate is 7.25%, my credit union offers a car loan buyout for 1% less than my current rate. Making it 6.25%.

Can I just go shop around for any used car loan? I thought I'd have to do a loan buyout since I already have a loan... Can I just apply for another used car loan?

I don't really need money in my pocket other than 3 months of an "emergency fund" incase something happens... (car accident, loss of job etc...)
My car loan is by biggest concern because it the highest interest. Just bought a home so I wont need money for a down payment.

Floating the balance on a credit card... wow.. never thought of that one.. Don't they charge 3% for cash advances usually? Also, what card offers a long 0% term?

Some good ideas squid

rated:
   posted: Apr. 21, 2008 @ 10:38p
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krz4runner said:My current interest rate is 7.25%, my credit union offers a car loan buyout for 1% less than my current rate. Making it 6.25%.

Can I just go shop around for any used car loan? I thought I'd have to do a loan buyout since I already have a loan... Can I just apply for another used car loan?

I don't really need money in my pocket other than 3 months of an "emergency fund" incase something happens... (car accident, loss of job etc...)
My car loan is by biggest concern because it the highest interest. Just bought a home so I wont need money for a down payment.

Floating the balance on a credit card... wow.. never thought of that one.. Don't they charge 3% for cash advances usually? Also, what card offers a long 0% term?

Some good ideas squid

You should be able to do a buyout or refinance as far as i know. You are applying for a refinance

Floating a balance on CC.sure.They charge 3% fee. Some usually capped at 75. Depending on what card you have (check your citi offers online. They sometimes have 4.99% for life kinda things)

rated:
   posted: Apr. 21, 2008 @ 11:37p
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I'm looking at this PedFed thing a little more closely... I also have student loans at 7.22%. Should I put $0 down on the car and use some $ to pay down my student loan?

I am thinking this may be worth it since I think I may make too much to deduct the interest for my student loans off my taxes.

rated:
   posted: Apr. 22, 2008 @ 7:29a
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If Penfed will do a straight refi on your car loan, take it.

7.2% taxable beats any other risk-free return on your money that I know of. I'd put everything except my emergency reserves into the student loan after I got the car loan down under 5%.

rated:
   posted: Apr. 22, 2008 @ 7:37a
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krz4runner said:I'm looking at this PedFed thing a little more closely... I also have student loans at 7.22%. Should I put $0 down on the car and use some $ to pay down my student loan?

I'd recommend consolidating (refinancing) your student loans if you haven't done so yet to get a better interest rate.

Message edited by: johnnybs on 2008-04-22 07:37:24 CDT
rated:
   posted: Apr. 22, 2008 @ 7:59a
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Thanks for the heads up on penfed!!

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   posted: Apr. 22, 2008 @ 8:26a
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I would go with option D.

rated:
   posted: Apr. 22, 2008 @ 8:56a
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Refi the car with penfed. try and refithe student loans you should be able to get under 6 maybe under 5%.
Pay min on whichever is lower
pay all but 3 months expenses toward higher.

rated:
   posted: Apr. 22, 2008 @ 4:52p
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Congratulations on your aggressive savings. I would ask this question, if you had a paid for car, would you go out and take a loan on it at the bank then invest the money in the stock market? Most people will answer no. How much do you love this car, what if you sold it, bought a 15K corolla that got 40mpg (depending on what you drive, this could save a couple thousand a year) then invested the other 10k and the gas money saved, which would become a million in 40 years... just a thought. (not that anyone would necessairly want a million 40 years from now, but it just shows how a little sacrafice now can make a big difference later)

Message edited by: jwillgoesfast on 2008-04-22 16:53:52 CDT
rated:
   posted: Apr. 30, 2008 @ 8:34p
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Thanks for all of the help.

This is what I decided to do...

-Refinance the total car (24k) from 7.25% (60mo) to 4.25% (48mo) at Penfed.
-Pay off the 13k in student loans
-Keep the car for a while.. Its an 06 Acura TSX, with all of the options.. and it gets 32mpg..
I bought it because it holds its value well and has low maintenance costs.

Now, while i was applying for the pedfed loan, I was using my Mac and the car value calculation wasn't working properly so I saved the application... Then I went over to my PC and went to look for "continue application", it wasn't there and the status is "Approved"

Is it just that easy to be approved? Do I need to complete more of the application?

If anyone has refinanced their car from another lender, can you give me an idea what to expect next?

Thanks again everyone!

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