Here's my deal: I took out a loan in May for $17,000 through Bank of America. I was very limited in my choices for a loan because I had no credit (didnt own a credit card till a few months ago). Because the car was 6 years old I got screwed, 13.9% interest and a 3-year loan period. A 5-year old car wouldve given me an 8.9% rate for a 5-year loan.

Anyway, this netted me a $580/month payment with a painful amount of that going to interest. In 7 months Ive paid $1300 worth of interest. :rolleyes I have been paying about $250 extra per month towards the principle (skipped a few months but just dumped $1500 into the principal this month) to try and pay this off. As of now I still owe about $12k.

Is there a way I can renegotiate a car loan? I figure with 7 months of payments I should have SOME credit by now. How would I go about getting a lower interest rate? I dont mind a high monthly payment but I hate the fact that so much of it is going towards interest! :mad

Yes, you can refinance a car loan...and you don't have to use the same bank.

Cool, what's the process?

yeah I wouldn't try and renegotiate just look around for a new loan...

try peoplesfirst or some one else. they are cheap like 5%ish

Jeff

The procedure works just like getting any car loan.

Find the bank with the best rate. If you can get into a credit union through work or family that is usually best; or maybe try eloan.

Once you get the loan the new bank will send the payoff to the old bank.

Gotcha, I better have enough freakin credit by now to get a better rate!

Correct me if I'm wrong guys - but I'm pretty sure that there is no benefit to refinancing a car loan. (definately on a new car loan anyway -- may be different for a used car)
I know that when you take out a loan on a new car, the balance of the loan is immediately equal to the price of the car plus the total amount of interest you will pay -- so if your car cost $17k, and your total interest charges equalled x dollars, your loan balance is immediately equal to $17k+x dollar -- so your high interest rate is already factored into the entire loan.

What this means is that paying the loan off early or refinancing does you no good (unlike a mortgage on a house, where interest is added on a per month basis.)

I dont *think* that's the case with mine. When I viewed my loan online when I first took it out it said $17k. If interest had been factored in it probably wouldve been $25k+. :dunno

Justin,

I financed my M3 for one year at about 8% because it was the best I could do. After a year I refinanced with the company's credit union at 3.9%, lost a month of payment and cut the total interest I would pay to essentially zilch.

There are a lot of benefits to refinancing, especially with that ridiculous interest rate. :eek:

The amount of my used-car loan was the amount that I financed, not the amount that I financed plus the interest. Same deal with Marisa's Jetta, which she bought new. The amount financed didn't take into account the interest.

John

Find a credit union if you can join one. You work for the government, so join one of them. I got 3.9% on my M3 2 months ago and am looking at 4.25% on the 325 if I get it.

I second http://www.peoplefirst.com

Ive refinanced once through them and have had 2 other new loans with them.

Refinancing is good if youre early in your loan....

Try Capital One Auto Finance as well, but I think peoplefirst was purhchased by Cap One. Clearly it's time to refinance, and Cap One makes it very easy!

I have never tried it, but it might be worth calling the current loan bank and asking them if they would review and lower your rate. :dunno It works with credit cards.

Correct me if I'm wrong guys - but I'm pretty sure that there is no benefit to refinancing a car loan. (definately on a new car loan anyway -- may be different for a used car)
I know that when you take out a loan on a new car, the balance of the loan is immediately equal to the price of the car plus the total amount of interest you will pay -- so if your car cost $17k, and your total interest charges equalled x dollars, your loan balance is immediately equal to $17k+x dollar -- so your high interest rate is already factored into the entire loan.

What this means is that paying the loan off early or refinancing does you no good (unlike a mortgage on a house, where interest is added on a per month basis.)

I think you're right if there are pre-payment penalties. This can be true of any loan - mortgage, car, etc - Mike ought to look into it. If he's not penalized for paying early, he should be able to pay the principal and the loan can be closed out.

Mikey -

You work for the fed. gov .. join either the navy FCU or Pentagon Federal Credit Union www.penfed.org <--- I like them better. I believe the interest rate is 4.25% -- they have always been able to offer a better used/new rate than a typical bank, e.g., through any commercial bank. Plus, they offer GAP insurance and other nice things, e.g., higher yields with bonds/CD's.

Your credit report may not have been updated enough at this point -- I would have someone pull your credit report and run the FICO scores to see where you are at. Typically, it takes one year ... six months is not long enough.

Justin,

I financed my M3 for one year at about 8% because it was the best I could do. After a year I refinanced with the company's credit union at 3.9%, lost a month of payment and cut the total interest I would pay to essentially zilch.

There are a lot of benefits to refinancing, especially with that ridiculous interest rate. :eek:

The amount of my used-car loan was the amount that I financed, not the amount that I financed plus the interest. Same deal with Marisa's Jetta, which she bought new. The amount financed didn't take into account the interest.

John

Must depend on the lender and the type of loan then-- I had a friend one time whose parents bought her a new nissan something. It cost $18k and they financed almost all of it. She hated the car and tried to trade it in on something else -- but couldn't because her loan balance was $23k with the interest already figured into the principle. :eek: The dealer told her she'd have to put $5k down just to get back to a $0 starting point. :eek:

Must depend on the lender and the type of loan then-- I had a friend one time whose parents bought her a new nissan something. It cost $18k and they financed almost all of it. She hated the car and tried to trade it in on something else -- but couldn't because her loan balance was $23k with the interest already figured into the principle. :eek: The dealer told her she'd have to put $5k down just to get back to a $0 starting point. :eek:

Pics?? :confused

Mike, why did you wait so long to get a credit card of your own?? 13.9% is just rediculous. :rolleyes

Credit Cards are the Devil!!!! But they are a necessary evil to establish credit. :(

Pics?? :confused

Mike, why did you wait so long to get a credit card of your own?? 13.9% is just rediculous. :rolleyes

That's not a nice thing to say :nono .. Besides it's ridiculous ... :rolleyes

I think something like 60% of americans have average to below average credit. Only like 10% have credit scores above 700.

Credit Cards are the Devil!!!!

:nono

It's the same thing as cash. CC's allow a person to spend money they don't have. Lack of self-control is the devil. :stickoutt

That's not a nice thing to say :nono .. Besides it's ridiculous ... :rolleyes

I think something like 60% of americans have average to below average credit. Only like 10% have credit scores above 700.

Which makes no sense! Most americans have below average credit. Read that statement and talk about statistics.

Actually Suze Orman agrees about the CC.

Which makes no sense! Most americans have below average credit. Read that statement and talk about statistics.

Hey, I never said I was a math major or an accountant :rolleyes

Besides, it says average or below average (60%). Above 700 = A+ prime I believe (10%) Thus, there are 30% of people with good credit (which is better than average.) Thus, statistically ... my statement is still accurate. :stickoutt

:nono

It's the same thing as cash. CC's allow a person to spend money they don't have. Lack of self-control is the devil. :stickoutt
I agree with Andy. The issue is self-control. If you cannot control yourself with a credit card, then get rid of the card. If that is the best way for you to keep from going into debt, then go ahead and do it.

Scott

Suze Orman
:rolleyes

Pics?? :confused

Mike, why did you wait so long to get a credit card of your own?? 13.9% is just rediculous. :rolleyes

I really just had no reason to get one. Ive always just used my debit card or cash for all my purchases and until I tried to apply for the loan, I had no reason to own a CC. If I didnt need to build credit, I still wouldnt have one.

A correction, I dont work directly for the government. I am the lowly scum of the Earth...the government contractor. :(

Another question, is the fact that I had to have my Mom co-sign on my loan going to affect a) my credit history (like it wont improve as quickly?) and b) my ability to refinance the loan on my own?

There is no loan out there that should add on the entire interest for the loan onto the principal. Every loan should have an amortization schedule, which does mean that more interest is shifted up front and less principal and that gradually flip flops as the loan term nears balloon...

Any lender that is doing that I think should get sued and prosecuted...

Jeff

Another question, is the fact that I had to have my Mom co-sign on my loan going to affect a) my credit history (like it wont improve as quickly?) and b) my ability to refinance the loan on my own?

No ideally if you could just have you as the primary name on the note and her as a secondary..but in any event a co-signor won't hurt your credit.

Jeff