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Need some quick advice! (TD Auto Loan)


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Hey everyone,


Long story short, last year I took on an auto loan through TD Auto Finance at an interest rate of 19%.


My monthly payments on the car are around 300, which is easily manageable for me, and I have had no late or missed payments in the last year on the loan.


I was contacted by the company I purchased the car through to let me know they can get me a lower interest rate if I refinance by purchasing a newer car.


My current loan has around $10,000 left on it, and it's on a car that's currently worth about $5,000 - due to the extremely high interest rate.


My main concern at this point is management all of my expenses and continuing to rebuilt my credit.


I have periodically checked Equifax, and my score has slowly been going up since i've taken on the loan.


I'm just looking for some advice on whether I should take on a new car loan, which would include carrying over the negative equity on my current loan after selling the current car - to take the lower interest rate (do higher monthly payments help build my rating faster?).


The only issue is that the company has told me the bank won't approve less expensive cars, as they won't carry over the negative equity.


With the cars that will "work" with TD Finance - i'd be looking at a monthly payment increase of over $200, which is insane.


My question is, what is the best route from here? Should I just continue paying off my current loan at 19%? Even though most of the money is going directly to the bank, it appears to be helping me rebuild my credit.


Is there any other solution here?


Any advice would be greatly appreciated!


Thanks in advance.



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If your car is in good shape I would just keep it and finish paying it off. No reason to go and add your negative equity on to a loan that will raise your payment that much. Without knowing everything it sounds like you might have decent credit by the time this one is paid off. If that's the case then you might look at buying something new later on. If you have a good credit rating in the future you might qualify for a zero percent loan through a major auto manufacturer.


A lot of these companies like GMAC, FMC etc. will look more at how you have paid your previous auto loans instead of your overall credit in making the decision. So in the future you might be able to get a new 20K car for around the same payment you have Today. 

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Lenders send out those canned offers all the time based on who has an open loan with them with absolutely no correlation to whether it would be approved or no.  I think you have no choice but to pay this off.  Lenders will not refinance a car that is upside down (negative equity) so you would be hitting your credit score with the hard pulls for refinancing only to be denied.  


Buying another car and pushing the negative equity to a new loan is not a good option either because then you are paying on 2 vehicles one of which you no longer own.


I would look into taking some of the money you would have spent on a higher payment into making extra payments towards the principle only to shorten the loan and decrease the amount of interest you pay over all due to paying it off earlier.

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Thanks for the replies everyone!


@lionhunter I believe the is 5 years, and I have 4 years remaining on it.


When I had spoke to the company that I got the car from, I actually mentioned that I would rather take the difference of having higher payments and put it towards my current loan to get it paid off quicker.


Him, being a sales guy, gave me the shpeal about me currently paying for an older car being pointless with the interest rate being so high, and that it makes more sense financially to get the new car and pay half the interest, as a lot more of the money would be going towards the car.


A big red flag for me was that the new monthly payments would be $560, and on a 6 year loan - some quick math tells me that's around $47k, and seeing as I currently only owe around $10k, that's clearly not a wise financial decision. 


I think i'll stick with my current car and just work on paying the loan off quicker - I don't believe there is a penalty for that within the terms.


Thanks for your help!

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