Refinancing

can any number expert or non-expert explain how i can save on refinancing my loan.

I have $20k left.
paid 29 months($535/mo) out of 66 month term already.
I looked into used vehicle refinance 37 month at 4.6% apr but ends up $581.

 

I just refinanced mine five months ago. I dropped the interest rate 1% and went from 63 months of payments left to 48 months. My payment went up $50.00 a month, but I was willing to live with that in order to reduce the number of payments (I didn't give any additional money down for the refinance). For me it was about paying off the truck sooner. That said, it depends on what you want to do with your loan. Do you want to lower your payments or do you want to reduce the number of payments you have left? To lower the payment and pay it off sooner the difference in interest rates between your current loan and the new one has to be at least a 2% difference, maybe more. How much lower is the 4.6% for the refinance compared to your current loan? Keep in mind that you only have 29 months left to pay it off and it might not be worth it to refinance at this point.

PS. not a loan expert just giving you my perspective from what I did.

 

I would like to lower my monthly payments without paying extra.

 

Then you need to lower your interest rate. The lower the interest rate on the refinance compared to your current loan the lower the payment will be. You have to check with the bank to see if they offer a 29 month refinance option. They may only offer a 24 or 36 month refinance. The bank should be able to give you the different options that they offer and tell you what your monthly payments will be on the new loan. I told them what I wanted to do and based on that they told me what options they had and what the new payment would be.

 

thats the thing though, with the lowest rate available for their used vehicle refinancing. its still more for 37 months.

 

Then you would need to see if by refinancing you're going to be saving money on the interest on the loan. For example, right now you have $2,000 left to pay in interest and with refinance going to 37 months the interest portion of your payment will be $1,500 for the loan. At that point you would need to decide do I refinance and extend the number of payments to payoff the loan to save what may be a small amoubt of money. It might make more sense to just stay where you are at and pay it off in 29 months.

 

i went to navyfed within 6 months after purchase. they told me to wait a year. now that its been over 2 yrs, it may not be worth it?

 

It may not be in your case. You should still find out what your options are for the refinance, if it's something you really want to do. Finding out is free and then you'll know for sure whether or not it's worth it to refinance. For me it was because I reduced the number of payments and saved a lot on the interest. My bank has a program that if you refinance with them they lower you interest 1%, so I went from 2.9% to 1.9%. My payments went up because I reduced the number of payment and that was fine with me. Good luck!

 

if the interest rate is lower, generally you going to save. either plug the numbers into excel and write a formula or find a formula online to do the compare. i recommend refi into a lower rate and making a payment every time you get paid. ie, if you get paid every week, pay 1/4 of your monthly payment weekly. if you get paid every other week, pay 1/2 your payment every other week. just doing that will save you intrest. carry on

 

How good is your credit score? I got a loan on-line from Lighstream and they didn't care what is was for, is was a "cash" loan, at 2.9% for 48 months.

 

You can effectively lower the interest rate on your current loan and pay it off sooner by paying extra on a regular basis. It doesn't cost anything, unlike refi or another loan. It takes financial discipline, and will get you out of debt quicker. Your credit score will thank you.

 

I agree with the last post about just paying more. There is one other way to manage this and that is to get a home equity line of credit on your home and use the funds to pay off your current auto loan. There is a very good chance that your home equity line will be at a lower interest rate than your auto loan. Check out Home Equity Line Of Credit FAQ

Meanwhile, the biggest thing here is what your remaining balance is vs how much interest you will save vs the cost of refinancing. If there are any fees to refinance your auto loan, they could almost wipe out the interest savings if you do not have too much of a loan balance left.

 

I don't see you accomplishing your goal. You might be able to lower your payment and go with a longer term, but you'll increase the total interest paid. $20,000 for 48 months at 5% would lower your payment to $460. But you'd have an additional $2100 in interest.

The problem is that you've already paid the biggest part of the interest on the front end of your original loan and didn't pay down the loan very much.

You'd have been better off to have set up the original loan for a longer term, and lower payments. Then pay extra when money was available, and the minimum payment during months when things were tight. I'd just suck it up for the next 3 years. If you pay extra you might pay it off in 2 or 2 1/2 years and save some money. But even then, paying extra the 1st year or 2 of a loan makes a bigger difference than paying extra the last year or 2.