Anyone ever refinance their car?

**Michelle** · 07-02-2008, 10:29 AM

We were really backed up against the wall when Dave bought his car, and I'd love to get a better interest rate to pay it off sooner, just don't know if it's worth it, how it works, etc.

TIA

**Greebo** · 07-02-2008, 10:50 AM

What's the make & model, and how much do you owe?

**Michelle** · 07-02-2008, 11:05 AM

2004 Ford Taurus, and I'd rather not give specifics on the amount owed. I'm assuming that it will factor into your reply somehow since you asked, but I don't understand how (other than the blue book value, maybe?) :think: Let's just say more than $5K and less than $10K.

**Russ** · 07-02-2008, 11:12 AM

How much longer do you have to pay on it if you don't refinance?

**Greebo** · 07-02-2008, 11:16 AM

It factors in because if you're worried enough about the payments on a 5 year old car that you want to refinance, you may very well have bought too much car. Did you buy it new?

Refinancing the car won't solve much - refinancing a sub 10k debt is a yellow flag to me that your overall financial picture is on shaky ground, at best. You might get a lower monthly payment, but you'll end up paying a LOT more interest in the long run. Refinancing now is a good way to keep in the pattern of always having a car payment.

**lgw** · 07-02-2008, 11:22 AM

I believe when it comes to homes, the rule is refi if you can drop your interest rate 1.5 percent. I would think cars would be similar.

You may want to consider taking out a line of credit/loan against your house if you can get a rate that is substantially lower than your car loan rate. Use the money to pay off the car, and then just pay down the line/loan. One of the benefits of the LOC/loan is that you can deduct the interest paid. You can't with cars.

Just a thought.

**Michelle** · 07-02-2008, 11:28 AM

Originally Posted by Greebo

It factors in because if you're worried enough about the payments on a 5 year old car that you want to refinance, you may very well have bought too much car. Did you buy it new?

Refinancing the car won't solve much - refinancing a sub 10k debt is a yellow flag to me that your overall financial picture is on shaky ground, at best. You might get a lower monthly payment, but you'll end up paying a LOT more interest in the long run. Refinancing now is a good way to keep in the pattern of always having a car payment.

I'm not sure what you mean when you say that I'm "worried enough about the payments...". I am not worried in the least that I can't make the payments. I just want to see if I can save money w/a lower interest rate. No, we didn't buy it new.

My "overall financial picture" is far from shaky. Other than our mortgage, it is our only debt. We just paid off $32K worth of debt over the past 18 mos.

How is refinancing keeping me in the pattern of always having a car payment?

I'm merely looking into my options. I don't intend to always have a car payment. I'd rather not ever have one, but sometimes it can't be helped, and that was the situation when we bought the car.

**Michelle** · 07-02-2008, 11:29 AM

Originally Posted by rcannon

How much longer do you have to pay on it if you don't refinance?

3 1/2 yrs if we don't refinance

**PrairieRose** · 07-02-2008, 11:31 AM

I've not done it but I'm thinking that it wouldn't be such a bad idea Chelle if you could a)lower the interest rate thus leaving you more money to snowball and b)not pay it out as long as you finance it for.....

ETA
or c) throw the savings back into the refinanced payment saving even more on interest

jmho.

**Michelle** · 07-02-2008, 11:32 AM

Originally Posted by lgw

I

You may want to consider taking out a line of credit/loan against your house if you can get a rate that is substantially lower than your car loan rate. Use the money to pay off the car, and then just pay down the line/loan. One of the benefits of the LOC/loan is that you can deduct the interest paid. You can't with cars.

Just a thought.

I looked into doing a HELOC loan, but the interest rate is higher than the auto loan's interest.

Thanks for the suggestion though

**Michelle** · 07-02-2008, 11:33 AM

Originally Posted by PrairieRose

I've not done it but I'm thinking that it wouldn't be such a bad idea Chelle if you could a)lower the interest rate thus leaving you more money to snowball and b)not pay it out as long as you finance it for.....jmho.

I agree, which is why I'm currently researching my options

**Greebo** · 07-02-2008, 11:35 AM

Originally Posted by Michelle

I'm not sure what you mean when you say that I'm "worried enough about the payments...". I am not worried in the least that I can't make the payments. I just want to see if I can save money w/a lower interest rate. No, we didn't buy it new.

My "overall financial picture" is far from shaky. Other than our mortgage, it is our only debt. We just paid off $32K worth of debt over the past 18 mos.

Good to hear - the question you asked is just not one I'd expect to hear from someone who's financially solid, but rather from someone who's looking for a short term fix to a crisis of finance. It was not my intention to offend.

With your debt payoff track record, if you owe less than 10, you should be able to pay the car off in 5 months. So the question becomes, can you save enough on interest to make up for the closing costs of a refi. That's not something I can answer - I have never refi'd a car and don't know what you would expect.

How is refinancing keeping me in the pattern of always having a car payment?

The assumption here again being a dangerous financial state with someone looking for a quick fix to the wrong problem (ie: fixing the payment, not the spending). Typically, someone who is in a bad situation, who looks to take out more debt or restructure debt in order to ease the payments, is just setting themselves up to continue having debt payments for the rest of their life. Including a car pmt.

**Greebo** · 07-02-2008, 11:36 AM

Originally Posted by Michelle

I looked into doing a HELOC loan, but the interest rate is higher than the auto loan's interest.

Thanks for the suggestion though

I'd also argue that the risk of tying your house to a car is not worth it.

**Michelle** · 07-02-2008, 11:46 AM

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.

**MTS04** · 07-02-2008, 11:53 AM

I would pay it off completely today and then sock as much as you can into your EF. So long as you have no other outstanding Debt.

You are losing money if you continue to pay interest on a loan.