Car Refinancing

[Sarvis]

So, a few months ago I bought a new car because my old car was becoming increasingly unsafe to drive. At the time, I still had a credit card in collections but had been making regular payments on it for over a year... but basically my credit rating was shit, and my interest rate is shit. I just paid off that last credit card today (yay!) and I've heard a couple people mention refinancing auto loans.

So, how soon after paying off that credit card (today) will my credit report start to look like I'm not a deadbeat? Also how long is best to wait before refinancing a car loan? I had assumed like a year, but I started looking into it today and a couple places were saying to do it soon after the initial purchase.

[Lilira]

Most banks/credit card companies report every 6 months or so, so if you just finished paying off the credit cards, call them and ask when the last time they submitted a report was, and how often they report.

Get a copy of your credit report somehow as well and read it very carefully. We found a 4k judgement on ours that wasn't us at all. Whoever had been doing the paperwork grabbed the name and SSN of the nearest name to resemble my husband's. I challenged it, got the proof from the court and sent it to the credit agencies. All clear!

[Sarvis]

So basically it'll probably be at least 6 months before I can do anything with it?

Bleh. 11% interest sucks...

[Grumdikanikus]

But the good side is that you have paid off the balance on the card that probably had close to 20+% interest. WAY TO GO!!!!!*CHEER*

Don't get down if you can't re-finance right away.

Also, remember if you own a house/townhome try seeing about an equity line of credit from a bank. You might get close to the same interest rate but the interest you do pay is Tax Deductible. So that's a break on taxes.

Grummy

[Corth]

Wow,

I can't think of a worse financial move for someone in your position then to FINANCE a NEW DEPRECIATING ASSET when you are already on shaky financial ground.

That being said, and having already made a lousy mistake, your best option is to sell the thing while it still has some value and buy a cheap old used honda or toyota. Your second best option is to refinance the loan. Of course, neither is probably feasible because your are undoubtedly underwater on this stupid purchase. That means, in all likelihood, the car is now worth less than your loan amount. So if you wanted to sell it, OR refinance it, you would have to come up with the difference out of pocket.

Welcome to the debt trap.

[Sarvis]

Wow,

I can't think of a worse financial move for someone in your position then to FINANCE a NEW DEPRECIATING ASSET when you are already on shaky financial ground.

Given that it's actually harder to get financing for a used car, I don't think I had much choice. Worse yet, used cars come in two categories lately: In worse shape than the car I was trying to ditch, and in good shape but costing almost as much as a new car.

That being said, and having already made a lousy mistake, your best option is to sell the thing while it still has some value and buy a cheap old used honda or toyota.

Right, sell a new car 3 months after buying it. Brilliant plan.

Your second best option is to refinance the loan. Of course, neither is probably feasible because your are undoubtedly underwater on this stupid purchase. That means, in all likelihood, the car is now worth less than your loan amount. So if you wanted to sell it, OR refinance it, you would have to come up with the difference out of pocket.

Welcome to the debt trap.

Undoubtedly underwater? You have so little faith, do you honestly think I'd buy a car I can't afford? I'm actually pretty financially stable right now, and with my credit card finally paid off the only bills I have are student loans, car and insurance. Hopefully I'll be adding rent to that list soon, but I want to get some money saved first.

[Ambar]

What interest rate did you get for this car?

Sorry, Corth is right .. he is an ambulance chaser, I work at a bank and asked one of our Financial people ..

It is called *upside down* when you pay more for a car/owe more than its worth .. did you look at the blue book value at all or just accept the crap rate?

Sometimes ya gotta do what ya gotta do but dont knock people that have been there done that and are offering advice ....

[Kifle]

What interest rate did you get for this car?

Bleh. 11% interest sucks...

But yeah, kinda a bad choice there Sarv. It was just an irrational economic decision on your part. Just because I can afford a 100 dollar snickers bar, doesn't mean it's a good deal, nor does it mean I'm going to pay for it. A better idea would have been to keep your car drivable for another six months and get a new car after your credit score was better and you could get a decent interest rate. Hell, even buy a crappy $500-$1000 car if your car really needed that much work to be safe (although I highly doubt it). Your best bet is to either refinance in 6 months if you can get a lower interest rate, or pay extra per month and pay that thing off as quick as possible. Moving out probably wouldn't be too economically sound unless you want to be wasting money on a shitty loan because you can't afford to pay off the car quickly while also making rent/electric/gas/water/trash/home repairs/groceries/deposits/etc...

[Sarvis]

Sometimes ya gotta do what ya gotta do but dont knock people that have been there done that and are offering advice ....

He wasn't offering advice though, he was belittling me. Look at the difference between his post and Kifle's, at least Kifle offered a suggestion even if he agreed with you and Corth about the wisdom of purchasing a new car... whereas Corth basically just said it was a stupid thing to do and went on about how screwed I was.


And anyway, it's not as if I went out and bought some hotrod way outsideof my budget. I bought the second cheapest car I could find, and that's only because the cheapest is a Chevy and there's no way in hell I'd buy a Chevy.

<b>Kifle</b>


Well, one brake line had burst, and while I'd replaced it, I felt it was only a matter of time before the other one kicked out too. Plus whatever pipe leads from the gas cap to the tank started leaking, and the driver's side door was getting increasingly difficult to open, and the windows didn't work and as an old school V6 it sucked gas like an SUV. Well, maybe not quite that bad.

I loved the car, but the problems were mounting up higher than I could continue to deal with... the brake line and leaky gas intake were just the last straws.

I'm only paying about $4k more for the new car than I would for a 2001 of the same make/model, and will probably save close to that in repair bills.

Anyway, can we stop with the "you shouldn't have bought a new car" crap, and focus instead on information about refinancing?

[Ambar]

Several people have said wait a few months til your credit settles, THEN TRY to refinance .. 11% for crappy credit isnt horrible, you may just want to stick it out til you can afford a new(er) car. Most used car financing goes nywhere from 6-10% anyway, newer cars go for lower rates indeed .. And honestly interest rates are different from bank to bank .. call your LOCAL bank and ask for their rates ...

If you are indeed upside down, wait it out .. sorry it was YOU that messed up your credit, not the finance company. They will often call SEVERAL *bankers* to see who will finance you and for what rate. Then they will tell you the better rate.

Consider cqar lots as banks themselves. They are trying to make a buck by dupid Joe Average into financing with their company. Interest rates even vary from income to credit rating .. so while I personally have excellent credit (even at 17 amd 18 I made wise CREDIT desicions) and got 1.9% on my car, you may not ... and have to settle with higher for now.

I dont think Corth was belittlin YOU so much as where America trends are going in general. You just hapgpened to post ona favorite topic of his .. and became the *idiot ina trap* (I am NOT calling YOU an idiot .. just the situation)

We are a nation of credit .. seems the more you have the better off you are which is utter bullshit. With todays trends we will NEVER pay our debt off, the way we finance and refiannce. Mortgages for example .. you can get a FIFTY YEAR interest only mortgage and how DUMB is that!!!! Where our parents were paying off their mortgages BEFORE retirement, we will only be half way in ...

Sorry this is a sore subject with me, I was a financial advisor as a collateral duty while I was still active duty, and I saw a LOT of my folks get screwed with interest rates and impossible *deals* Several years ago one of my sailors got roped into a car loan that was going to be MORE than his paycheck every two weeks, so essentially he'd never be able to pay.. we had to call elgal to get him out of that ..

Again, nothing personal here, you got trapped by something MANY people get trapped with (other than messing up your credit for which only you are to blame)..

-Jennifer

[Ambar]

For the record you may be able to get a free credit report. some of the bureaus offer a rfee report once a year and it varioes as to when by the state you are in ...

[Lilira]

Sarvis.

My husband and I just ended up purchasing a brand new car. I know your pain on the financing thing, trust me. We were looking for a good used car, but it is a pain trying to finance them. We managed to catch ours during the "everyone is buying their students cars for college" time of the year so we got a great deal and a chunky rebate which we used for the down payment.

We still have our used vehicle and about every three months or so I get an offer from HBSC to refinance. They'll start showing up in a bit. Just study them reallllly carefully. Capital One also has a refinancing department for auto loans.

Trust me. Right now the economy is kinda so-so, as evidenced by the fact its a serious buying market for homes (people are tossing in cars with houses just to SELL the house around here!) and banks are courting customers. Patience is very much a virtue (yeah it sucks to pay that rate) and a lot of smaller banks are bending over almost backwards to get the customers in the doors.

Seriously, its my suggestion you wait for the credit cards to roll over on your credit history and then look at refinancing. I don't have any bank experience.. just lots of personal experience.

[Sarvis]

Trust me. Right now the economy is kinda so-so, as evidenced by the fact its a serious buying market for homes (people are tossing in cars with houses just to SELL the house around here!)

Hell if I'd known THAT I might have just bought a house. ;)



So here's a question: The collections guy said they would send me a letter verifying that the debt was paid off. Would it be possible to send copies of that to the credit reporting agencies so they could get that off my record before the bank actually reports it?

[Minofagal]

i don't know exactly how this would work, but often credit unions offer better interest rates on loans than regular banks like wells fargo and chase. when i bought my jeep i opened an account with 50 bucks and got a rat 4% lower than what chase offered me. it might be too late for that though, i'm not sure.

[teflor the ranger]

Wow,

I can't think of a worse financial move for someone in your position then to FINANCE a NEW DEPRECIATING ASSET when you are already on shaky financial ground.

Given that it's actually harder to get financing for a used car, I don't think I had much choice. Worse yet, used cars come in two categories lately: In worse shape than the car I was trying to ditch, and in good shape but costing almost as much as a new car.

That being said, and having already made a lousy mistake, your best option is to sell the thing while it still has some value and buy a cheap old used honda or toyota.

Right, sell a new car 3 months after buying it. Brilliant plan.

Your second best option is to refinance the loan. Of course, neither is probably feasible because your are undoubtedly underwater on this stupid purchase. That means, in all likelihood, the car is now worth less than your loan amount. So if you wanted to sell it, OR refinance it, you would have to come up with the difference out of pocket.

Welcome to the debt trap.

Undoubtedly underwater? You have so little faith, do you honestly think I'd buy a car I can't afford? I'm actually pretty financially stable right now, and with my credit card finally paid off the only bills I have are student loans, car and insurance. Hopefully I'll be adding rent to that list soon, but I want to get some money saved first.

Actually, Corth's advice is some of the best financial advice that I've seen. If I were you, I would consider what it means to you more seriously.

Also, yes, you can forward your creditor's letter to the three major credit reporting agencies. They have a bit of a turn-around time, however.

[Ambar]

You can either request the company send the payoff notice, or request they send you the payoff notice and send it yourself .. and who do you trust? yourself i hope ..


MOST reputable places wills end payoff notices as a general practice, but yes in their time not yours ...

[Lilira]

Hell if I'd known THAT I might have just bought a house. ;)

But Sarvis dear.. would you really want to move to AL? I don't think this state is big enough for you AND Maxler....