Looking for those who have refinanced an auto loan as well as traded in?

[AboveAverage]

I am interested in biting the bullet hard and am interested in going to the dealership and getting financing. I am probably going to want a $18000 sticker-price car. Based on my scores, I will probably get the go-#@@-yourself rate. If the payments are less than $600, I don't care. I am in desperate need to:

A) Improve my credit to eventually get a house. No better installment loan than a car loan

Be mobile. Public transportation in Urban NJ has stopped being fun and cute.

With that said and out of the way, I really want to know the following. I have read a couple of threads on this but they didn't really answer my questions.

1) If I have, say a $600 a month payment on a $18000 loan, assuming I make on-time payments, when can I refiance? I understand that I need to show a healthy payment history, but I'd like to know when that payment history becomes healthy. 6 months? 1 year? 2 years?

2) The threads I read concentrate on refinancing to lower their payment. I don't want to do that because I'd like to pay my 72 year loan in a minimum of 3 years/maximum 4 years. Also, I may want to trade in whatever car I get at the end of the warranty period or slightly before. What is the best way to achieve this? Should I pretty much stay with the car I end up getting until the loan is done and then trade-in? I guess I'm just looking for "best practice" on this subject.

As always, any advice on this subject is appreciated and the best advices will get you a cookie (chocolate chip or oatmeal raisin, your choice... )

[VeVe]

My Fico was 503 and I got a 2008 car with Toyota Financial. In September, my car failed inspection, needed $2500 in repairs to pass, had 125k+ miles on it, so on my way home from work that day I stopped at the Toyota dealership and left four hours later with a new car. Final papers signed before I left and everything. When I was browsing and the sales guy came outside, I told him my score and he said it was no problem, and we went from there.

Anyway, the rate was 16.4%. I put $500 down, and they gave me $600 for my VW trade-in (I probably could have gotten $400 more, but honestly I was glad they were taking it and I didn't have to deal with getting rid of it on my own - I had front end damage, broken window, etc. I drove it around Philly a lot, and it looked it). Payments were $410/month for 70 months. Car was $18,500.

Fast forward to December 2007. I was looking at my HSBC reward points online, and at the bottom of the screen was a link for HSBC auto and it said something about refinancing. I figured, why not? Filled out the online application, got a pre=approval, called the phone number on the screen, gave the rep more details on the car (make, model, mileage, etc) and she gave me two rates with two payment lengths. Option #1 was 12.something%, still for 70 months, and would reduce my monthly payment by $30. Option #2 was for 11.something%, same monthly payment, and would reduce payments by an entire year. I took Option #2, and will refinance again later in the year. It's taking well over $6k off the overall payments.

Honestly, I feel like I made the right move. Even after the down payment and four monthly payments, I haven't put out as much money as I would have paid to get my old car repaired. I don't have to worry about maintenance costs since they're currently covered by the dealership.

[merkurfan]

if your sub 550, and really must finance something. Go for 10-12k at the most. I had a 14000 loan on a mini-van made payments on it for 1 year at 23.95% and paid over 3000 in interest.

I sold that one off for what I owed and bought a 06 Mazda. The total intrest on the contract for the mazda is less than what I paid in the first year on the van.

[AboveAverage]

...I took Option #2, and will refinance again later in the year. It's taking well over $6k off the overall payments.

Honestly, I feel like I made the right move. Even after the down payment and four monthly payments, I haven't put out as much money as I would have paid to get my old car repaired. I don't have to worry about maintenance costs since they're currently covered by the dealership.

VeVe,

Thanks for your response. From your initial 503 score, what did your score jump to that got you a nice reduction in the rate? I won't mind making the same payment if it means my loan will be done quicker. Also, do you anticipate refinancing again and if so when?

I am expecting to have two major baddies gone, God willing within the next 60days.

if your sub 550, and really must finance something. Go for 10-12k at the most. I had a 14000 loan on a mini-van made payments on it for 1 year at 23.95% and paid over 3000 in interest.

I sold that one off for what I owed and bought a 06 Mazda. The total intrest on the contract for the mazda is less than what I paid in the first year on the van.

Merk, I would rather have something new. $15k-$18k will be ok with me, as I am expecting the first of two mandated increases by March. The second will be beginning of July (beginning of the new fiscal year). I based whatever insurance payment I had on the salary I currently make now, so that I know when I get my raises, after taxes, I will still be comfortable. When you sold your car, how long did it take for the title to be released to you by your finance company? Was it a quick process?

Also, did both of you pay anything extra toward the principal? Or was it straight-up the minimum payment? I calculated my rent payment for the year in such a way that if I stay to the schedule, I won't pay rent during a calander month. If I do the same to the bills (which I'm leaning toward doing), in theory, I should have up to $3k to put toward my principal (minus groceries, of course). Should I do this, or would it be best to put this money else such as savings, and what not?

If anyone else has anything to add to this thread, I still have more cookies. I am starting to formulate a plan.

[VeVe]

VeVe,

Thanks for your response. From your initial 503 score, what did your score jump to that got you a nice reduction in the rate? I won't mind making the same payment if it means my loan will be done quicker. Also, do you anticipate refinancing again and if so when?

I am expecting to have two major baddies gone, God willing within the next 60days.

Well, that's the interesting part.

503 was my fico with EQ. That score is at 575 now, but I can't even see that HSBC pulled that report. It looks like they pulled EX, which is my lowest (though I can't figure out why - nothing is different) at just over 500 as well.

I think I remember Toyota pulling my entire credit report though (not just a score), so on there I had a fully paid lease, and a fully paid loan, both with Volkswagen Credit, and the majority of my delinquencies are my student loans (which are being reported inaccurately). Not sure if that's what helped me with them or not.

I plan on refinancing again once some of the errors clear up, or when I have a year of new accounts reporting. Then I will probably just go through my bank.

[VeVe]

And even more interesting in this whole thing is that my car insurance went down about $40/month.

[merkurfan]

Merk, I would rather have something new. $15k-$18k will be ok with me, as I am expecting the first of two mandated increases by March. The second will be beginning of July (beginning of the new fiscal year). I based whatever insurance payment I had on the salary I currently make now, so that I know when I get my raises, after taxes, I will still be comfortable. When you sold your car, how long did it take for the title to be released to you by your finance company? Was it a quick process?

Well, alright. If you want to pay HUGE interest and be WAY upside down on the car when it comes time to refi. You can go this route. But remember, when you refi the car if you owe way more than it's worth, no one will do it for you. It is NEVER a good idea to buy at a high rate with the hopes of getting a lower one later. Cars are losing value faster than the dollar. I bought my Malibu for 14,500 1 year ago. It's worth 8500 now. No bank in their right mind is going to refi that car when I owe 12,500 on it. Thankfully that loan is at 7% as mommy co-signed. I would go become a member of a credit union as they will likely give you the best rate. If you go new you will not qualify for the low APR rates the manufactures offer.

If I where you.. I'd scrape up what I had money wise and buy a get by car. (a cheap car to "get by") I just helped a friend do this. Got him a 88 Corsica with 41,000 miles on it and a glove box full of repair slips totalling 2500 bucks for the past year. cost of the car, 800 bucks. I figure we'll have his credit cleared up long before that car is wore out.

Title wise I got that 1 month after I bought the van. The lein card however I am STILL waiting for. the loan has been PIF for 90 days now. Chase is EXTREAMLY slow.

Also, did both of you pay anything extra toward the principal? Or was it straight-up the minimum payment? I calculated my rent payment for the year in such a way that if I stay to the schedule, I won't pay rent during a calander month. If I do the same to the bills (which I'm leaning toward doing), in theory, I should have up to $3k to put toward my principal (minus groceries, of course). Should I do this, or would it be best to put this money else such as savings, and what not?

Bu payment is 400 a month, I give um 250 every 2 weeks. 5 payment is 300 a month, they get 175 every 2 weeks.

If anyone else has anything to add to this thread, I still have more cookies. I am starting to formulate a plan.

I told you what I think. Cars are a money looser no mater what you do. My golden rule with cars is NEVER, EVER, EVER buy new. My Mazda 5 was 25,000 new. I bought mine a year old with 25K on it for 13,500... It still has 25K left of the bumper to bumper warranty left on it. I let those that like to buy new pay down half the price of the car for me.

[VeVe]

Well I can see that Merk and I have been a HUGE help on this one!

[AboveAverage]

Merk and Veve, your cookies are on the way. I understand "new" is probably not the way to go for someone with crap credit, so what I'll probably end up doing is take the plunge and do it for about a year and then go then sign up at the local credit union. (Or sooner if my my student loan and Americredit go away...) Probably give them $25 to open up a checking account and just let it sit there, then when it comes time to deal with them on the refi (probably around Christmas, since they seem to just give away rates), I'll refi, keep the same payment or hopefully lower it so that I can pay the same payment anyway and just finish quicker.

I would have liked to deal with a used car though, and yeah sure Jersey has a Lemon Law, but I do like the fact that the only thing I'll have to pay for maintaining the car is the occasional oil change and brake pads. I know all too well the joys and pains of driving a "hooptie." [pronounciation: HOOP-TEE, n. very used car]. I'm just tired of doing it, and having to have extra money around just to get juiced by a mechanic.

The way I see it, I'm gonna pay more to drive the car anyway. I just want to be done with it soon.

[AboveAverage]

Thanks to both of you, I was able to do independent research courtesy of his Google-ness, and found a great article which I will post in a seperate thread. It is pretty much the plan I or someone who in fact did get a high interest loan might follow.

http://www.debt-consolidation-credit-repair-service.com/forums/showthread.php?p=883321#post883321

[merkurfan]

huh????? used=junk???

Bu has given me 30K trouble free miles. has just under 60K on it. Engine and trans still have 40K left on the GM provided warranty

5 is covered under the factory 5/50 bumper to bumper warranty still. (and they mean it, my bumper came loose and they fixed it no charge)

All I have had to do is maintain them

GM also is putting 100K warranties on their certified cars.

If you really really gotta have a new one..

Buy a Kia. They give credit to most anyone. You can get a Rio for what? 12K??? Nice warranty 10/100 just know that you will likely be stuck with the loan for the life of the car.

I hear they are darn near giving the Aveo away over a chevy to.. I got a e-mail from the dealer that sold me the Bu, 6495 for a new Aveo with auto and air. They might even give you a radio too!!! Cool pair of shades so your friends don't reconize you not included.

I think you missed my point about refi.. If you buy new, at a high rate (high teens or higher) you will be so upside down on the car in a year no bank is likely going to refi it unless you have a HUGE chunk of extra change. Go to Edmonds.com and check out the "true market value" of the car you want to buy that is a year old or so with the miles you expect to put on it. That will give you an idea of what a bank will feel it's worth in a year. (also, they will think it is worth LESS than edmonds by 10-30%)

I realize you think you have some extra money coming.. What if you don't? what if you loose your job?? By taking on a rent like car payment you are setting yourself up for disaster. Trust me, the wife and I went back and forth about just that, 2 car loans, my tool payments, and the rent... For me it's a safe bet, if I find myself out of work I can find work quickly as I am trained in two very high demand fields and experianced in a 3rd.

"just to get juiced by a mechanic"

Watch it buddy, there are those of us that are Automotive Technicians who pride ourselfs on fixing your car right have a wall full of certificates on the wall (I lost count at 30 for me.. ASE Mastertech L1)

Then there are the idiots that work for 10 bucks an hour.

Pick the first and no one will be juicing you. Pick the second and you will be paying for on the job training.

[VeVe]

Have you applied anywhere yet?

Try HSBC and see what they say: http://www.hsbcusa-autoloans.com/

[VeVe]

I think you missed my point about refi.. If you buy new, at a high rate (high teens or higher) you will be so upside down on the car in a year no bank is likely going to refi it unless you have a HUGE chunk of extra change. Go to Edmonds.com and check out the "true market value" of the car you want to buy that is a year old or so with the miles you expect to put on it. That will give you an idea of what a bank will feel it's worth in a year. (also, they will think it is worth LESS than edmonds by 10-30%)

I really, really have to disagree with you. My refinancing saved me tons of money, and a full year of payments. HSBC pulled up everything about my car. They told me how much I owed on it still, and financed the full amount (actually, I'm getting a refund from Toyota for a few hundred becuase there was a slight overpayment). I had no early payment fees, only a $5 fee with HSBC (tags or registration of some sort, I don't remember).

Volkswagen approved me at 21%, with $4k down, with payments of $650/month for 60 months, plus my trade in. I laughed at them, went to Toyota the next day, and got 5% lower, no down payment, far lower monthly payment, etc. The rate all depends on where you go. I think the OP should be able to get something around 15-16% which could be refinanced soon down the road.

[AboveAverage]

huh????? used=junk???

Bu has given me 30K trouble free miles. has just under 60K on it. Engine and trans still have 40K left on the GM provided warranty

5 is covered under the factory 5/50 bumper to bumper warranty still. (and they mean it, my bumper came loose and they fixed it no charge)

All I have had to do is maintain them

In my experience, the used cars I have bought were junk. I have been burned too much by always buying hoopties that for once, I just want something that will be stable. At the same time, I'm also very practical. I would love to drive a Benz or BMW, or Lexus or Acura. Hell, I'd even like to test drive one of those. Will I? I think we both know not right now. BUUTTT, if I get something that's within my means, why not.

If you really really gotta have a new one..

Buy a Kia. They give credit to most anyone. You can get a Rio for what? 12K??? Nice warranty 10/100 just know that you will likely be stuck with the loan for the life of the car.

I hear they are darn near giving the Aveo away over a chevy to.. I got a e-mail from the dealer that sold me the Bu, 6495 for a new Aveo with auto and air. They might even give you a radio too!!! Cool pair of shades so your friends don't reconize you not included.

I said I was practical, not stupid. Hell, why don't you put me in one of those new $2500 Indian Tatas while you're at it...

Seriously, forget paying to drive one of them, you couldn't PAY ME to drive those.

I think you missed my point about refi.. If you buy new, at a high rate (high teens or higher) you will be so upside down on the car in a year no bank is likely going to refi it unless you have a HUGE chunk of extra change. Go to Edmonds.com and check out the "true market value" of the car you want to buy that is a year old or so with the miles you expect to put on it. That will give you an idea of what a bank will feel it's worth in a year. (also, they will think it is worth LESS than edmonds by 10-30%)

Your point was not lost on me whatsoever. Basically you said that my loan after a year will be worth more than the value of the car, hence upside-downage. Which is why I may consider throwing any extra money on the principal of the loan to hopefully offset some of this.

I realize you think you have some extra money coming.. What if you don't? what if you loose your job?? By taking on a rent like car payment you are setting yourself up for disaster. Trust me, the wife and I went back and forth about just that, 2 car loans, my tool payments, and the rent... For me it's a safe bet, if I find myself out of work I can find work quickly as I am trained in two very high demand fields and experianced in a 3rd.

"just to get juiced by a mechanic"

I'm a civil servant who is unionized (and have been most of my working career of about...11 years, with a three year stint of private sector experience just to "try-it-out"). Even if I were the stereotyped civil servant (you know, lazy, know-nothing and do-nothing), I would still have my job at worst until I retired with just regular salary increments. Job Security is something I'm not worried about. (At best, I would have gotten at least one promotional title...which in my line of work should not be dificult to do.)

Watch it buddy, there are those of us that are Automotive Technicians who pride ourselfs on fixing your car right have a wall full of certificates on the wall (I lost count at 30 for me.. ASE Mastertech L1)

Then there are the idiots that work for 10 bucks an hour.

Pick the first and no one will be juicing you. Pick the second and you will be paying for on the job training.

Mr. Merkufan, my apologies if you feel I lumped you in there as a mechanic who would juice me (or the rest of your ASE brethren). But again, I am speaking from my own personal experience. If it were like the old days, I would actually want to fix the car myself. Ironically, when computers started becoming involved, it made fixing your car (yourself) complicated (and I am a certified A+ and Network+ technician myself, which is why it's ironic.... ).

The thing is, it's not enough for me to find a ASE shop, but also one that it's business is reputable. (ie. Not charging me $3000 for a $1000 job). For at least 3 years (or 36k miles), I wouldn't have to worry about that. But that definitely wasn't a dig on you, kind Sir.

[merkurfan]

In my experience, the used cars I have bought were junk. I have been burned too much by always buying hoopties that for once, I just want something that will be stable. At the same time, I'm also very practical. I would love to drive a Benz or BMW, or Lexus or Acura. Hell, I'd even like to test drive one of those. Will I? I think we both know not right now. BUUTTT, if I get something that's within my means, why not.

Benz and BMW's will take you for a huge chunk of ging in maintance. I just did a 30K per BMW requirements on a 7 series. Total bill all said and done was 2200 bucks. If you go high end, go Lexus, Acura, Infinity. Stay away from the Euro cars and Cadilac

I said I was practical, not stupid. Hell, why don't you put me in one of those new $2500 Indian Tatas while you're at it...

Many people own and drive Kia's, they are great cars, cheap, and from the ones I have seen come through here they are near bullet proof. The Aveo is what you pay for. Don't knock the Tata auto line. The 2500 dollar one is actaully the Nano. For the $ they are great cars for people that can't afford much else. Keep in mind the last car labeled the peoples car was the VW bug, look how popular those where/are

Seriously, forget paying to drive one of them, you couldn't PAY ME to drive those.

I'd pass on a Nano too. But I have owned and driven serveral Kia's. I had a Optima for almost a year. That was a luxury car with lots of frills

Your point was not lost on me whatsoever. Basically you said that my loan after a year will be worth more than the value of the car, hence upside-downage. Which is why I may consider throwing any extra money on the principal of the loan to hopefully offset some of this.

It's your money. but your wasting it. your going to spend thousands during the first year before refi on interest alone. I am also trying to warn you that what ever you buy you may not be able to refi. So prepare to be stuck with the orginal loan you got when you buy the car. Credit requirements change, a year from now the fed rate could be 20% or it could be 1% either way it affects loans.

I'm a civil servant who is unionized (and have been most of my working career of about...11 years, with a three year stint of private sector experience just to "try-it-out"). Even if I were the stereotyped civil servant (you know, lazy, know-nothing and do-nothing), I would still have my job at worst until I retired with just regular salary increments. Job Security is something I'm not worried about. (At best, I would have gotten at least one promotional title...which in my line of work should not be dificult to do.)

Mr. Merkufan, my apologies if you feel I lumped you in there as a mechanic who would juice me (or the rest of your ASE brethren). But again, I am speaking from my own personal experience. If it were like the old days, I would actually want to fix the car myself. Ironically, when computers started becoming involved, it made fixing your car (yourself) complicated (and I am a certified A+ and Network+ technician myself, which is why it's ironic.... ).

The thing is, it's not enough for me to find a ASE shop, but also one that it's business is reputable. (ie. Not charging me $3000 for a $1000 job). For at least 3 years (or 36k miles), I wouldn't have to worry about that. But that definitely wasn't a dig on you, kind Sir.

www.iatn.net

I would send my mother to any shop that is a member there.

In the desk drawer I have A+ MSCE, Novel and a few others. I did computers for 7 years. Even union jobs are not a lifetime deal. Who knows who could be president in a year, perhaps they will down size you out of a job? It's not likely but it could happen. You could also get hit by a turn up truck and forget how to do your job. I a private sector union job (UBEW) doing low voltage wiring, I got laid off, and fell off the bench back to turning a wrench. Unions are not what they use to be.

Buy a used GM product and you don't have to worry about engine or transmission problems for 100,000 miles, buy a used lexus and get the same type of warranty. Acura and Honda offer something like that as well. Some used cars have better warrantys than new ones Mazda has a transferable 5/50 bumper to bumper warranty. Now, wouldn't a used Mazda6 speed awd look nice in the driveway????

[AboveAverage]

Not only am I aware of the VW as being the "People's Car", I am also aware of who designed it...(the same guy who came up with the Autobahn)...not that I would let that fact take away from the car itself though. The original Bug was built like a tank and was so great on gas. That really isn't here or there.

Merk I truly appreciate you trying to save me money. You seem to know what you're talking about. You are definitely an oddity in regards to you being both a tech and a grease monkey. Usually, folks fall into one of the two camps but not both (I myself am not alone in regards to fixing cars...many of my colleagues (myself included) at best can change a tire or check the oil.) That sounds pretty cool though. I will weigh my options carefully at this point and consider getting something decent and used. Hopefully I can get a decent warranty.

BTW, the Nano is a great alternative to folks over in India to a scooter. Folks having a wife and kids galavanting on a scooter seems ridiculously unsafe. If the Nano ever made it here, I'm sure it'd go the way of the Yugo.

[merkurfan]

Not only am I aware of the VW as being the "People's Car", I am also aware of who designed it...(the same guy who came up with the Autobahn)...not that I would let that fact take away from the car itself though. The original Bug was built like a tank and was so great on gas. That really isn't here or there.

Not much for a heater though. I hear the Nano does not come with A/C.. The moto, "if you don't need it, it ain't got it" comes to mind.

Merk I truly appreciate you trying to save me money. You seem to know what you're talking about. You are definitely an oddity in regards to you being both a tech and a grease monkey. Usually, folks fall into one of the two camps but not both (I myself am not alone in regards to fixing cars...many of my colleagues (myself included) at best can change a tire or check the oil.) That sounds pretty cool though. I will weigh my options carefully at this point and consider getting something decent and used. Hopefully I can get a decent warranty.

Todays newer cars have more computers in them than some companies server farms. And now with in bay updates you have to know more about computers than ever to fix newer cars. I had a Dodge Magnum SRT in my bay today that had no fewer than 10 computers reporting on the bus. Anything from the Engine/Trans computer right down to the one that ran the power seats. It ended up in my lap because the data bus was acting funny.. Guess when you install your own car audio equiptment you need to be careful where you put the screws Something as stupid as leaving your headlights on and running the battery dead can put a car on the tow truck to me (or the dealer) because the car forgot the RF code for your key and won't start.

Car wise, go used, but still manufactur certified. Then check their warranties and settle on one. Then go try to buy one.

BTW, the Nano is a great alternative to folks over in India to a scooter. Folks having a wife and kids galavanting on a scooter seems ridiculously unsafe. If the Nano ever made it here, I'm sure it'd go the way of the Yugo.

The Yugo was plauged with several problems. One it was before it's time, gas was cheap when it came to market, no one cared. Another was that it was butt ugly, lastly, they where reliabably unreliable. And parts where hard to come by. The Nano however looks much like the cars that roll around much of europe so I suspect it will do well. Although in the US market we will likely never see them. They hardly live up to Euro 3 emission standards, they won't pass here at all. The NTSB will have to run a few in to walls and I suspect they won't do to well in that department either.