Overhaulin'

Should I refinance my car loan, given these details?

I was a first time car buyer on August of 2006 when I purchased my 2002 VW Jetta. I put my name and my spouses name on the car when we financed it through the dealership at a rate of 10.45% (we were told it was a good rate for first time purchasers). I have been making all payments and we just recently checked our FICO credit score which was 790 and 780. We have about 11,000 left on the loan and were deciding on if we should refinance, or maybe trade it in?????

Public Comments

1. Yea... im 22 and a first time buyer and I have a rate of like 7%. Your not talking 10's of thousands saved... but a thousand or two over that time. I think they probably took advantage of you. Always know your credit score!! :) ***EDIT*** What will it hurt to get a quote on a loan rate anyways?
2. Refinance it and check with you local bank and or credit union.
3. Regardless of what you do (trade or refi) you're going to have a hard time getting out from under that bad loan. With a high interest rate you still owe too much on your Jetta.
4. If you think that you are paying a higher repayment amount for your existing car loan<!--then you can bring it down. With the help of refinance car loans, you can switch the loan plan with effective loan management. http://best-loans.awardspace.com/refinance-car-loan-bad-credit.htm If you think your lender is charging a higher interest rate on your car loans then you can look at the refinance car loans option. With the help of a refinance car loan, you can avail multiple benefits. Firstly, you may reduce-->your monthly costs. Secondly, you may avail a competitive interest rate. Thirdly, you could be getting a flexible repayment period. Overall, you will be managing your loan a lot better.
5. With your good credit score, you might be able to get down to about 7.5% (according to Bankrate.com for used cars) and you can check how much it will affect your payment with the following calculator: http://www.autoloancalculatoronline.com I doubt that it will lower your payment significantly unless you spread out the loan and make it longer, which will likely put you into an upside down situation. You may already be upside down and may find it hard to get another loan ("refinance") without a down payment to reduce your negative equity. Refinancing will result in higher overall financing costs for the two loans. A large portion of your payments so far have gone to interest, which is the way loans are designed. So you've already paid a good portion of your total interest on your current loan. Your future payments will go more and more toward paying down the principal. If you get a new loan, you start all over again, paying lots of interest up front and little toward principle. In short, you may be able to lower your payments by refinancing but you'll increase your total finance costs, probably have to extend your loan, and become upside down on your loan. Being upside down is not good if you want to sell or trade (or refinance) before the loan is paid off. It also exposes you if your car is stolen or totaled in an accident. Your insurance will only pay what the car is worth at the time of the accident, not what you still owe on your loan. The difference can easily be thousands of dollars.