When is the best time to refinance your auto loan?

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quame14
 
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When is the best time to refinance your auto loan?

Postby quame14 » Sun Dec 01, 2013 2:16 am

I want to refinance my auto loan I know I'm going to get a few points deducted from my score but I want to make sure I get the best cheapest rate. Is it good to refinance after a few months.?


sj632
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Postby sj632 » Sun Dec 01, 2013 2:57 pm

Usually refinancing a auto loan doesn't make much sense. Why would do it after a few months? Rates shouldn't have changed that much and if you did it a few months ago and if your credit score was good then you should have gotten a good rate therefore no need to refinance.

DoingHomework
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Postby DoingHomework » Mon Dec 02, 2013 11:01 am

I hope you do the math first! You will almost definitely pay thousands of dollars over the next few years for the delusion of having a better rate. Auto loans should almost never be refinanced.

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jumbo
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Postby jumbo » Mon Dec 02, 2013 2:40 pm

DoingHomework did the math as his homework. :cheers:
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thom02099
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Postby thom02099 » Mon Dec 02, 2013 3:50 pm

Sorry, but gotta disagree with the guys above. A lot depends on whether you are financing with the same lender or going with a different lender. You might be in a rush to get a loan approved, go thru a dealership, get a loan but the interest rate may be higher than you want. If you shop around (after the fact) and find a better loan with better rate, then it could make sense to refi.

Also, if with the same lender, there are times when a lender will give special rates, or you as the customer may have had a change in credit score that would move you to a better rate. I've done that several times, gotten a better rate and lowered my monthly payments. The TRICK is to keep the same terms, ie, if you're on month 26 of 48 month loan, only refil for 26 months, so your payoff date remains the same but your payments for the same product are lower.

I also did this with an RV, knocked 2.5 points off the interest rate, kept the terms the same, lowered my monthly payment by over $60.

HOWEVER....if you go with terms different than the current loan, back to another 48 or more months loan, then I agree with the other guys, doesn't make sense to do that.
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DoingHomework
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Postby DoingHomework » Mon Dec 02, 2013 5:01 pm

True. That's why I said to do the math. Far too many people these days get suckered into refinancing then pay fees to have their $500/month payment reduced to $450 with the term extended out another 2 years. That means the new loan cost them roughly $12000 but many people are dumb enough to think they got a good deal. You are not but many are.

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Postby thom02099 » Mon Dec 02, 2013 10:17 pm

Yup, math is sorta like karma...it can be a b**ch if you're not careful! ! !
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Postby MemberSince99 » Tue Dec 03, 2013 8:49 pm

DoingHomework wrote:True. That's why I said to do the math. Far too many people these days get suckered into refinancing then pay fees to have their $500/month payment reduced to $450 with the term extended out another 2 years. That means the new loan cost them roughly $12000 but many people are dumb enough to think they got a good deal. You are not but many are.




I've read about dealers scamming people this way. I've read stories, which I find believable, saying how the Lienance I mean Finance Manager will call you say 2 weeks after you driving the car home and say "Great news we were actually able to get you better financing terms than we expected and lower your payment. Just drop by anytime to sign the paperwork". Oh sure, they will in fact lower your payment, and what they count on is you NOT reading it to see that what they did is the Old Jedi Mind Trick where they do this by increasing the length of the contract and in fact increased the total cost of the vehicle while looking like they are saving you money. Exactly what you said here basically except they are brazen enough to pull this after the fact and count on most people not bothering to really read the fine print. 1



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