Anyone ever refinance their car?

**Greebo** · 07-02-2008, 11:55 AM

Originally Posted by Michelle

Well I think we'll need to agree to disagree on some points. I was looking for a way to get the most bang for my buck. Sort of like how I search for coupon codes before buying something online or when I clip grocery coupons--just to get a better deal. I was not trying to fix anything.

In actuality, I could pay off the car today, but I am struggling with the decision to have a fully funded EF or a car payment. I am concerned with the economy (like everyone else), and I want to make sure I have enough money in savings should Dave be laid off or be forced to take UPTO (unpaid time off--still just a rumor at his job, but a possibility nonetheless, especially since he was forced to do so a few years ago). If that wasn't a concern, I would pay off the car right now.

Because I could pay it off completely today, I wouldn't be worried about losing my house over it if I were to go that route, but again, the interest rate on that HELOC loan is higher than my car loan rate. So that doesn't make sense.

Let me give you a different perspective to consider.

If you paid the car off TODAY, and Dave were laid off tomorrow, then you wouldn't have to worry about the car being repossessed.

If you refi, you still have a car payment, and a car payment w/ a hubby w/ no job means eating up that EF a lot faster than a smaller EF with a job.

Do you have real concerns that Dave is likely to be laid off? I mean - if its imminent, then Dave should already be looking for a new job, and yes, you should hoard cash and stop paying extra on debt. But if its not, if this is just you worrying about something that hasn't happened and doesn't loom on the horizon, then if you pay off the debt TODAY, how fast can you rebuild the EF by putting the car payment into something that earns interest instead of losing it? If your car payment is 500, and you owe 5000, then in 10 months, the EF is back to normal. BETTER than, in fact, because w/ no 500 payment on the car, the EF can be 1,500 to 3,000 smaller. (3-6 months of expenses saved, right?)

**itlw8** · 07-02-2008, 01:31 PM

remember car loans are like home loans you pay the majority of the interest in the first years... the amount of interest goes down with each payment...

so If you refinance you will start back at paying them the interest again.

but it depends... lower interest... how long the original loan was for will the new loan be for less or more time than you have left. lotsd of things to consider.

Me if I was worried about dh job I would pay off a chunk if not all of the car loan and then start putting that payment back into savings it will not take long to build it back up

**Michelle** · 07-02-2008, 01:37 PM

Originally Posted by Greebo

if you pay off the debt TODAY, how fast can you rebuild the EF by putting the car payment into something that earns interest instead of losing it? If your car payment is 500, and you owe 5000, then in 10 months, the EF is back to normal. BETTER than, in fact, because w/ no 500 payment on the car, the EF can be 1,500 to 3,000 smaller. (3-6 months of expenses saved, right?)

If I were to pay it off today and put only the car payment toward replenishing what I just took out to the EF to pay it off, it would take me 31 mos (our car payment is less than half of what you used in your example, and we owe a bit more than your assumption above).

**Greebo** · 07-02-2008, 02:00 PM

Originally Posted by Michelle

If I were to pay it off today and put only the car payment toward replenishing what I just took out to the EF to pay it off, it would take me 31 mos (our car payment is less than half of what you used in your example, and we owe a bit more than your assumption above).

This is why I like specifics in answers. Its hard to give good answers on vague replies.

So you owe between what, $6,200 and $7,700 on it, and are paying around $200-$249 on it? You've got 3.5 years of payments left, so you're going to pay between $8,400 and $10,458, $2,200-$2,758 of it all interest.

Your choice - 31 months to rebuild the EF (if you only replenish it with $250/month or less), or 42 months to pay off the car and 2 grand of stupid tax (interest).

And btw, I'm paying more stupid tax than you ever will right now on my 2 bought new hybrids. But I'm stubborn and refuse to sell them too, so don't think I'm unsympathetic.

But we are paying them off as FAST as we can and not saving anything extra till we do.

**Michelle** · 07-02-2008, 02:42 PM

Originally Posted by Greebo

This is why I like specifics in answers. Its hard to give good answers on vague replies.

I understand--my vague answers were in the interest of privacy, not to be difficult. I don't want to put all of my financial information out for the world to see. I was trying to get answers while giving the least amount of information possible.

I need to see if I can Dave on board paying it off all at once. That's a huge chunk of change, and even if we can swing it, it still makes me a bit nervous.