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  1. #1
    SNIKT! Karldar's Avatar
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    Help out the Karldar #3. Refinancing a vehicle.

    So I just dropped a huge chunk o' change on my wife's van(so that we can try to refinance it--we were upside down thanks to the trade/credit). I'm gonna try my credit union first, but the lienholder said that the dealer could do it, too. I'd also like to check out a bank and see what they have to say on the subject. Any thoughts on who might be the best lender for the job?
    I like pie!
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    but wait! theres more! shikaka's Avatar
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    saving! no debt is the best debt... unrealistic i know... can you imagine saving up for a house
    dont look too hard

  3. #3
    '05 NUEser EJ123's Avatar
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    chunk o' change
    Thats funny whenever you say the o' like in Jar o' Spiders in that one thread. hahaha

  4. #4
    riding once again jschen's Avatar
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    Quote Originally Posted by shikaka
    saving! no debt is the best debt... unrealistic i know... can you imagine saving up for a house
    Well, that's how my grandparents bought their homes. They saved and saved and saved, then one day bought a house. Yes, the financial system in rural Taiwan wasn't exactly up to modern specs.

    Karldar, most any financial institutiton should be able to handle the financing. No reason to be particularly loyal to anyone. Shop around. The best lender for the job is whichever one gives you the best interest rate under otherwise identical terms (same term of loan, same loan amount, etc).
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  5. #5
    SNIKT! Karldar's Avatar
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    I don't know if it matters or not, but the need is to get the payment as low as possible. Length and interest rate is not as important. My wife just needs to be able to afford the monthly payment for now. I just didn't know if one institution would be better for this than another. Shopping around is definitely the basic plan, tho.

    shikaka: I'm workin' on it, man! It's hard to save when you have to buy new CD's, tho.

    EJ: I'm happy I entertain you.

    jschen: Thanks for the advice! I'll take it under advisement!
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  6. #6
    riding once again jschen's Avatar
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    Be very careful shopping payments! Imagine if I loaned you $100. I could let you pay back in 5 monthly payments of $20 or 30 monthly payments of $5. In the first case, you're getting an interest free loan. In the second case, it seems far more "affordable", but you're getting seriously screwed. It's very easy to get seriously screwed if you're simply looking at the monthly payment amount. To avoid this, make sure you're comparing loan terms that are identical save the interest rate. Same number of monthly payments, interest rates locked in for the duration of the loan in all cases, any loan processing fees appropriately factored in.

    To minimize the payments, one simply prolongs the term of the loan. However, you pay dearly in doing so. You're paying interest for longer, and the interest rates tend to be higher. In an ideal financial situation, you'd buy your car in cash. But I cannot recommend taking out a car loan for longer than 4 years (48 months) unless you have a really good reason to do so. Preferably 2 or 3 years. There are plenty of places happy to loan you money that's to be repaid over as long as 6 years (!!!), charging you an exorbitant interest rate but managing to give you a marginally cheaper monthly payment than a 4 year loan. They make a lot of money off of you!
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  7. #7
    SERENITY NOW!!! jyossarian's Avatar
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    make sure u can pay the loan ahead of schedule w/o too much of a penalty. for example, if ur montly is $100, will they allow you to double the payment to $200 w/ the extra $100 going straight to the principal? and will they allow you to do that w/o you having to pay penalties?
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    how longs the loan going to be for?

    reason I ask, fuel is about to jump another 40% this year, quite a bit more if there's any "incidents", make sure you can deal with that

  9. #9
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by jschen
    Be very careful shopping payments! Imagine if I loaned you $100. I could let you pay back in 5 monthly payments of $20 or 30 monthly payments of $5. In the first case, you're getting an interest free loan. In the second case, it seems far more "affordable", but you're getting seriously screwed. It's very easy to get seriously screwed if you're simply looking at the monthly payment amount. To avoid this, make sure you're comparing loan terms that are identical save the interest rate. Same number of monthly payments, interest rates locked in for the duration of the loan in all cases, any loan processing fees appropriately factored in.

    To minimize the payments, one simply prolongs the term of the loan. However, you pay dearly in doing so. You're paying interest for longer, and the interest rates tend to be higher. In an ideal financial situation, you'd buy your car in cash. But I cannot recommend taking out a car loan for longer than 4 years (48 months) unless you have a really good reason to do so. Preferably 2 or 3 years. There are plenty of places happy to loan you money that's to be repaid over as long as 6 years (!!!), charging you an exorbitant interest rate but managing to give you a marginally cheaper monthly payment than a 4 year loan. They make a lot of money off of you!
    You make totally valid, and very good, points...as usual. Furthermore, I would normally agree wholeheartedly with you, my Californian friend. But...here's the deal: The lower the payment, the more easily she can afford it. The more easily she can afford the payment, on her income alone, the sooner she moves out. The sooner she moves out, the sooner the Karldar has a bachelor pad. Verstanden? Not trying to be an ass, just letting you in on the dynamics at play here. I'm going to help her out, if necessary, but the goal is for her to be self-sufficient...even if she gets screwed on the loan in the long run(which hopefully won't happen). Who knows, the van might get traded in on something smaller(I'm hopeful on that count, too). The best she's gotten out of it so far(in about a year of ownership) is 18.6 mpg. If you need more info, feel free to ask. It's really no big deal, well, except for having a roommate. We're still really good friends, tho...not that good, no.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  10. #10
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by jyossarian
    make sure u can pay the loan ahead of schedule w/o too much of a penalty. for example, if ur montly is $100, will they allow you to double the payment to $200 w/ the extra $100 going straight to the principal? and will they allow you to do that w/o you having to pay penalties?
    That shouldn't be a problem, especially if we go through the credit union. Our last auto loan was like that, and, yes, it sucked! The trade-in on the van put us upside-down immediately since we couldn't pay down the principal. This loan is pretty decent...6.6% interest(down from 17.9% ), on a 72 month loan, unfortunately. Of course, our credit is much better now, as well.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  11. #11
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by pedex
    how longs the loan going to be for?

    reason I ask, fuel is about to jump another 40% this year, quite a bit more if there's any "incidents", make sure you can deal with that
    Not sure yet about the loan length, and operating costs are definitely going to be a concern, but, like I said, I'll throw her some dough if I have to, especially if it's going to allow me to live by myself.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  12. #12
    Lex
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    Cheer****** of Doom Lex's Avatar
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    I will throw some random advice into the mix. I don't know the situation with the van but leasing is a good option if trading is a consideration. Leasing generally has lower payments and a smaller amount to finance at the end of the lease should you decide to buy. There are lots and lots of huge pain in the tush things if you turn the car in at the end but buying it at the end of the lease period is pretty straight forward.
    "I'm starting to have grave doubts about this thing I barely liked in the first place." Homer Simpson

  13. #13
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by Lex
    I will throw some random advice into the mix. I don't know the situation with the van but leasing is a good option if trading is a consideration. Leasing generally has lower payments and a smaller amount to finance at the end of the lease should you decide to buy. There are lots and lots of huge pain in the tush things if you turn the car in at the end but buying it at the end of the lease period is pretty straight forward.
    Thanks, Lex! I had considered it, but I think she's got her heart set on "her" van. The only thing that might move her in that direction would be a lower payment, I think. Having the dealership perform regularly scheduled maintenance might be a plus for her, too. She's not really mechanically-inclined.

    I figure we'll see whether we can get it refinanced first, then review all our options. Just 'cause we get approved for a loan doesn't mean we have to take it.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  14. #14
    riding once again jschen's Avatar
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    Quote Originally Posted by Karldar
    This loan is pretty decent...6.6% interest(down from 17.9% ), on a 72 month loan, unfortunately.
    So basically, all you'd be hoping for is to reamortize this loan. Since your balance just got reduced by a lot, you can pay less per month and still pay it off within the original timeframe. It's not likely you'll find a much lower interest rate, and you certainly aren't getting an even longer loan. Make sure to also contact the current lender to see if they can reamortize the loan for you. Interest rates have been creeping up, so it's possible that that would be the cheapest per month.
    If you notice this notice then you will notice that this notice is not worth noticing.

  15. #15
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by jschen
    So basically, all you'd be hoping for is to reamortize this loan. Since your balance just got reduced by a lot, you can pay less per month and still pay it off within the original timeframe. It's not likely you'll find a much lower interest rate, and you certainly aren't getting an even longer loan. Make sure to also contact the current lender to see if they can reamortize the loan for you. Interest rates have been creeping up, so it's possible that that would be the cheapest per month.
    Indeed! I never did get the hang of amortization. Strangely, the current lender indicated to me that they don't do that. They directed me to talk to my dealer. I plan to, but I'm not sure why they wouldn't just bypass the middle man. Plus, I might actually be able to get a better interest rate from my credit union. I have a friend at work with a similar vehicle(less expensive trim level/options) and his payment is less than half of mine, with about a 2 1/2 point lower interest rate. Thanks for the insight, jschen!
    I like pie!
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  16. #16
    riding once again jschen's Avatar
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    Quote Originally Posted by Karldar
    ...with about a 2 1/2 point lower interest rate...
    ...which puts your friend's interest rate at about 4%. 3.9% by any chance? Assuming your friend is in the US and financed in US dollars, there's no way this is the case unless the interest rate is somehow being subsidized. Perhaps because your friend financed through a special financing deal the automaker was promoting at the time the purchase was made. Don't count on finding a 4% interest rate out there.

    For some reference points, competitive money market (think interest-bearing checking account) interest rates right now are in the low 4's. The US government (the most trusted borrower, the definition of "risk free" for bonds) pays mid to high 4's right now for its mid- to long-term debt. 30 year fixed mortgages for people with good credit are running (last I checked... several colleagues are about to move on and make real money and have been consulting me about their finances for the next two years) around 6%. A car loan is riskier to a lender than any of the above, and thus justifies a higher interest rate.

    That's why I'm a bit pessimistic about you finding a better interest rate elsewhere. Definitely try, though. But make an effort to try to get your loan reamortized, also. If I had to lay money on the line and bet on where you'll find your best deal, I would grudgingly bet on the reamortization giving you the best deal.
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  17. #17
    but wait! theres more! shikaka's Avatar
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    as i now work for a bank, i get very low interest rates for loans and pritty much no account fee's either...
    dont look too hard

  18. #18
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    she should sell it and get an older car that she can afford.

  19. #19
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by jschen
    ...which puts your friend's interest rate at about 4%. 3.9% by any chance? Assuming your friend is in the US and financed in US dollars, there's no way this is the case unless the interest rate is somehow being subsidized. Perhaps because your friend financed through a special financing deal the automaker was promoting at the time the purchase was made. Don't count on finding a 4% interest rate out there.

    For some reference points, competitive money market (think interest-bearing checking account) interest rates right now are in the low 4's. The US government (the most trusted borrower, the definition of "risk free" for bonds) pays mid to high 4's right now for its mid- to long-term debt. 30 year fixed mortgages for people with good credit are running (last I checked... several colleagues are about to move on and make real money and have been consulting me about their finances for the next two years) around 6%. A car loan is riskier to a lender than any of the above, and thus justifies a higher interest rate.

    That's why I'm a bit pessimistic about you finding a better interest rate elsewhere. Definitely try, though. But make an effort to try to get your loan reamortized, also. If I had to lay money on the line and bet on where you'll find your best deal, I would grudgingly bet on the reamortization giving you the best deal.
    I think his is 3.9%, but I don't remember how he got it. His van is financed through a local credit union so it's not a deal with the automaker. He said that rate was discounted by 1/4 or 1/2 a point because he set up an automatic payment through the credit union. I'm not very worried about finding a lower rate, tho it would be nice, of course. Reamortization sounds like the way to go, assuming she doesn't change her mind and trade it in or something.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  20. #20
    SNIKT! Karldar's Avatar
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    Quote Originally Posted by velogirl
    she should sell it and get an older car that she can afford.
    Thanks for the advice. I agree and I'll relay it to her. I think those keys might have to be pried from her cold, dead hands, tho. She loves that behemoth...well, at least it's a little smaller, and gets better mileage, than full-sized SUV's.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  21. #21
    SNIKT! Karldar's Avatar
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    Yay! Looks like we're gonna trade in the van! My wife got gas for it yesterday(~$40) and I think that pretty much settled it for her. We got an offer to refinance which would lower the payment by ~$165/month, but at an interest rate that's about 2.4 points higher than what we have now. I've had so much trouble with even getting the reamortization set up with the CU that I'm tempted to close my account and move my money elsewhere. I suppose they can't just risk members' money on everything that comes their way, but, as a member, surely they could be a bit easier to deal with on this issue. No biggie, I guess. We'll go see the dealer next week and see what we can find for her.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  22. #22
    That darn Yankee TexasGuy's Avatar
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    loan companies suck.
    Life is about hanging onto what you think is important and finding out what really is important.
    "Stop Ruining my joke!", "No, a joke implies humor attached at no additional cost"
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  23. #23
    riding once again jschen's Avatar
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    Sounds like you're getting closer to that bachelor pad. Good luck.
    If you notice this notice then you will notice that this notice is not worth noticing.

  24. #24
    SNIKT! Karldar's Avatar
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    Update: I am indeed getting closer to my pad o' bachelorness. My wife put a deposit down on an apartment on Saturday(she moves in on the 28th) and we're refinancing the van tomorrow. I had her(and myself) convinced that she should trade it in, but the credit union offered us a lower interest rate(5.25%) and a monthly payment that's over $200 lower than our current one. I figure we'll try it and, if it's still too expensive for her, we can always trade it in later. Thanks for all the advice, everyone.
    I like pie!
    "The bright flicker of our television screens is the stolen incandescence of a thousand young minds." - Theodore W. Gray
    "you taught us to fish while so many others were handing out tuna sandwiches" - Ziggurat

  25. #25
    SERENITY NOW!!! jyossarian's Avatar
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    So I had to actually read most of this thread to figure out how you were getting a bachelor pad while you're married. I think you should build a technical single track in the living room. That would be frickin' hawt!
    HHCMF - Take pride in your ability to amaze lesser mortals! - MikeR



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