I just bought a new car with a 711 credit last march. my credit is 650 now. I would like to refinance.. my current apr is 6.99% should i refinance or let it be…when is the best time for me refinance.. this is my first car and first loan….
thanks!
I just bought a new car with a 711 credit last march. my credit is 650 now. I would like to refinance.. my current apr is 6.99% should i refinance or let it be…when is the best time for me refinance.. this is my first car and first loan….
thanks!
With a credit score of 650, you are now considered a sub-prime borrower and you will be fortunate to get a loan. You won’t come close to the interest rate you’re paying now, unless you can get a co-signer.
It would be best, as Bart recommended, to simply pay down your auto loan.
And, even better, it would be best to not borrow for a car purchase at all. It is not financially prudent to borrow money to purchase a depreciating asset, which is what a car is. Over the course of the loan, you will pay back up to twice the amount you purchased the car for. But, the car will only be worth a fraction of its original price.
If you want to be financially savvy, continue making "car payments" into a savings account once your loan is paid off. When you have enough money, take your savings and pay cash for your next car.
The idea of "refinancing" an auto loan is folly. Just pay down the loan as quickly as possible. You are in a very risky situation since the car is depreciating faster than the loan is being amortized.
Why do you want to refinance? Sounds like something you should just leave as it is.
I think thats the best interest rate out there. Depending on the age of the car your refinance rate may even be higher than what you got right now. Also consider this, once you refinance you are extending the period you will be in debt in favor of smaller monthly payments….and if you do the math for the most part you will end up paying more in interest. And not forgetting at some point you will find yourself with an upside down loan.
Keep on paying your auto note as it is right now….make some extra principle payments when you can. This will help improve your credit once you stick to it.